Life Insurance for FTB

Vok_2

Please I need some advice regarding life insurance. I am a FTB and my MA has suggested I take out a life insurance. Is this a common/necessary requirement when taking out a mortgage? Thank you in advance

ACG

If you die, what will happen?
There will be a pretty large loan that needs paying, can your partner or whoever afford it without you? Likewise can you afford it without your partner?

audigex

It's not a requirement. It can be a very good idea, though, depending on your situation.

If you're single, have no dependants etc, don't worry about it - if you die, your home is sold, the mortgage paid off and your family/beneficiaries are given the rest.

You could still choose to, which would mean your whole house is left to your beneficiaries when you die (the insurance pays off the mortgage) but it would cost you money each month. Unless you have children and/or a partner who you want to keep the house in the (hopefully exceptionally unlikely) event of your death, though, do you really care?

If you have children, or you want your partner to keep the house if you die, then yes, you probably need it to ensure they keep their home if you die: otherwise the house will be repossessed and your family are left to defend for themselves.

Most people take it out when they have their first child, or if their partner can't afford to keep their home without them.

Either way, you may want some kind of income protection insurance. Home insurance is usually mandatory with a mortgage.

dunstonh

Is this a common/necessary requirement when taking out a mortgage?

Is it necessary? no
Is it commonplace? yes - most people have life assurance to cover the debt as their spouse/partner getting evicted because they died is not how many people want to be remembered.

amnblog

Is it compulsory - no
Is it necessary - yes - for anyone with financial dependents
Is it commonplace - yes - for sensible people

dunstonh

Yes, i prefer your way of putting it amnblog

Vok_2

thank you all very much for your comments.

audigex

Again, though, if you have no dependents at all, there's really very little need for it.

If I died right now everyone I know would (I hope) be quite sad, but they'd all have a home, food etc. My money would go to family members named in my will, my house (when I complete, anyway) would be sold and the equity shared out as above.

I have absolutely no need for life insurance, as there is nobody who actually loses out if I die. I could pay a monthly amount to ensure they get my entire house if I die, rather than the 30% of it I own, but my risk is fairly low (healthy 25 year old) and that money can go to better uses right now.

With no dependents you may want it, but you don't need it.