Purchase life insurance prior to exchange

cramsteems

I was just wondering if it was okay to purchase life insurance before exchanging contracts on a house.

My partner and I have purchased life insurance which covers the house, it goes down yearly with the mortgage. We are due to exchange next week, the insurance is still being processed.

We decided to get it now incase of the worst as we would have to purchase the property even if something happened to one of us.

Would this policy be valid even before we have completed?

thank you! 

user1977

The life assurance doesn't "cover the house", it covers your lives - it will pay out whatever amount you've set it at if you die, it doesn't matter whether you've actually got a mortgage, own the house or have even exchanged contracts.

eddddy

You might get more advice on the Insurance board...

... but Life Insurance isn't directly connected to having a mortgage or owning a property. You take out life insurance independently of any mortgage/property. 

It's more a case of "If I die, how much money would my partner need to be financially secure?".

And often people decide, that "enough money to pay off the mortgage" is the answer. (But other answers might be equally valid.)


And you might decide that it makes sense to take out life insurance long before you purchase/exchange contracts - so that, if you die, your partner will receive enough money to buy a property without you, and be financially secure.

canaldumidi

The above advice on life insurance is fine. Buy it whenever you feel you want it, to protect your partner, children, whoever against financial hardship if you die. Or you might choose to extend it to include 'critical injury' insurance, in case you can't work afetr an acident, or you get cancer etc.

Unless,of course, you are thinking of 'mortgage payment protection insurance', which is different, pays out in different circumstances, and IS specific to you rmortgage.

TheJP

You don't have to have life insurance when buying a property with a mortgage. Life insurance pays out on your death and can cover the cost of the mortgage depending on what level you have set the pay out at.

rexmedorum

TheJP said:

You don't have to have life insurance when buying a property with a mortgage. Life insurance pays out on your death and can cover the cost of the mortgage depending on what level you have set the pay out at.

no, however if you would end up not being able to afford the mortgage if either of you died it's of course a sensible thing to do.

TheJP

rexmedorum said:

TheJP said:

You don't have to have life insurance when buying a property with a mortgage. Life insurance pays out on your death and can cover the cost of the mortgage depending on what level you have set the pay out at.

no, however if you would end up not being able to afford the mortgage if either of you died it's of course a sensible thing to do.

Of course, merely stating to the OP in case they were panicking on getting this sorted before exchange.

dimbo61

So Yes taking out Life Assurance before you buy a property is a good idea.
However I would take out Level term Life assurance which pays out a set sum for X number of years.
I would also ensure its a Level premium you pay each month for the whole term of the policy.
If your in your 30,s or even 40,s you should be able to get Joint Level Term Life Assurance for £100/130,000 for under £20 a month if you don't smoke or have any underlying health issues