Compulsory Insurance for mortgage

jay459

I am at closing stages of my mortgage and have been taken through life insurance with Zurich, its £15 or so and Building and Contents Insurance at £23 if I remember correctly. Was also stated critical illness was optional...

http://www.riskheads.org/compulsory-insurance-uk/

Mortgage lenders insist on life insurance, building insurance and critical illness.

To me insurance is the biggest con in the world. Fair enough it probably helps a lot of people out but it is just a commodity to make people rich.

Anyway, i want the bare minimum for my mortgage with Santander, what do i need thats actually compulsory...

dunstonh

To me insurance is the biggest con in the world.

People that have yet to make a claim often feel that.

Fair enough it probably helps a lot of people out but it is just a commodity to make people rich.

And stop others becoming poorer if they suffer a claimable event.

Anyway, i want the bare minimum for my mortgage with Santander, what do i need thats actually compulsory...

Only buildings insurance is compulsory.

jay459

Thanks and yeah I've never claimed. All my life I've refused every type of cover, I'm only insured on my car and thats only because i have to be haha

HappyHarry

Though not a condition of a residential mortgage nowadays, life insurance, income protection and / or critical illness is often recommended. Without such cover, in the event of death / illness and the you being unable to continue making payments, the mortgage company can and will repossess your property.

insurance is the biggest con in the world

No, for those that need to make a claim, it is one of the most important things in the world. If you think it is the biggest con in the world, then you have led a very sheltered life.

The reason mortgage companies insist on buildings insurance is that they want to insure the assets that they have a placed a charge on. The mortgage companies don't insist you take the insurance through them. This should demonstrate that the mortgage companies don't believe that insurance is a con, rather, they believe that insurance is a prudent, sensible approach to protecting an asset.

In your case, the asset you would be protecting is you, and your ability to have enough money to continue paying the mortgage.

Hopefully, you will never need to claim on insurance. However, if you do need to claim, and you do have insurance, you will certainly appreciate it's benefits

martinsurrey

http://www.bbc.co.uk/news/business-17403527

its a "con" till you need it, and then its too late

MataNui

Are you the only person on the mortgage? are you the only person living in the house?

If not then life insurance is sensible otherwise the remaining person (if they are named on the mortgage) may find keeping up the payments un-affordable. If there is another person who lives there (partner who is not on the mortgage but registered as an interest) then they will probably find themselves evicted if something happens to you.

magpiecottage

HappyHarry wrote: »

The reason mortgage companies insist on buildings insurance is that they want to insure the assets that they have a placed a charge on. The mortgage companies don't insist you take the insurance through them. This should demonstrate that the mortgage companies don't believe that insurance is a con, rather, they believe that insurance is a prudent, sensible approach to protecting an asset.

Actually, for the insurance company, this is both a legitimate exercise of commercial judgement (which FOS will not investigate) and, in the case of the OP, fair management of a conflict of interest.

I say this because the OP does not want to pay for cover but if his home was destroyed and he defaulted, there may be insufficient value in the remaining land to clear the debt and loss would therefore have to be borne by other customers of the lender.

Hopefully, you will never need to claim on insurance. However, if you do need to claim, and you do have insurance, you will certainly appreciate it's benefits

More to the point, hopefully he will not have to claim.

There is a cost to insurance because of the cost to running an insurance business - including regulatory costs. Like the rest of us, they are also unwilling to work for no reward.

So if you can afford to self-insure, it will be cheaper. However, the point of insurance is to meet those costs which you cannot afford if things go wrong. That is why most of us must have car insurance.

However, if you have sufficient assets to meet any potential claim, it is possible not to have insurance. I have in the past driven cars that had no insurance on them - because they were owned by an insurance company that clearly had sufficient resource to meet any claim.

GingerBob_3

HappyHarry wrote: »

Though not a condition of a residential mortgage nowadays, life insurance, income protection and / or critical illness is often recommended. Without such cover, in the event of death / illness and the you being unable to continue making payments, the mortgage company can and will repossess your property.



No, for those that need to make a claim, it is one of the most important things in the world. If you think it is the biggest con in the world, then you have led a very sheltered life.

The reason mortgage companies insist on buildings insurance is that they want to insure the assets that they have a placed a charge on. The mortgage companies don't insist you take the insurance through them. This should demonstrate that the mortgage companies don't believe that insurance is a con, rather, they believe that insurance is a prudent, sensible approach to protecting an asset.

In your case, the asset you would be protecting is you, and your ability to have enough money to continue paying the mortgage.

Hopefully, you will never need to claim on insurance. However, if you do need to claim, and you do have insurance, you will certainly appreciate it's benefits

That's one way of looking at it, but as I understand it, the real reason why they don't insist on you taking the insurance through them is that they are not allowed to do so. Before this restriction came in I seem to recall some/many of them did force this on their customers.

martinsurrey

GingerBob wrote: »

That's one way of looking at it, but as I understand it, the real reason why they don't insist on you taking the insurance through them is that they are not allowed to do so. Before this restriction came in I seem to recall some/many of them did force this on their customers.

One of the reasons for that was because its a logistical nightmare to ensure everyone has insurance for 25 years, and not just at completion when the solicitor could check for you.

there was also an element of price gouging though.