First time buyers - life assurance.

chrislee765

Hello,

Me and my girlfriend are buying our first home, purchase price of £169,000 (we have just exchanged).
I am 25 and she is 23. We would like to get some life assurance cover in case one of us pegs it.

Are we right in believing that level term insurance pays a cash lump sum upon death, of the value that you have insured despite your property being worth less? If so this is the product we believe suits us. I.e our mortgage is £140000, could we insure for £165000 to give some cash to pay for any time off/funeral costs etc?

We would probably do Life cover only, guaranteed and without increasing benefit.
What I am curious at, is how long we should set the term of cover? If we said, 20years, does that sign us into a 20year contract paying the premium? Or do people set it at 5years and renew at 5years? I'm struggling to find out what the pro/cons are of signing up for either a short or long term.

Any advice would be greatly received.
Thanks kindly,
Chris.

InsideInsurance

You normally take it for as long as you need, especially if its guaranteed premiums, to avoid the risk that you develop a medical condition that will either load your premiums or make you uninsurable at a later date.

In theory a shorter policy would be cheaper in the short term but you run the risks as mentioned above and as you get older the premiums will naturally rise.