Life Insurance requirement when buying a house?

B0bbyEwing

When we bought ours we were told that we MUST have life insurance, as in it's not an option.

Now there's a clear difference between must have & good practice to have.

I'm asking this because obviously we took out life insurance. We bought our house around 10yrs ago. My sister bought her house about 1yr ago & was told they didn't NEED to take out life insurance .... and so they didn't.

I'm just wondering whether we were told correctly or whether it's just something that's better to have than not but you don't need it.

Grizebeck

Who told you.....

Emmia

Can either of you afford the repayments for the house by yourselves if there was no insurance? Or would the survivor be forced to sell?

We have insurance so that the other person doesn't need to worry about that bill, although both of us could take it on alone (which is different from when we first brought).

marcia_

B0bbyEwing said:

When we bought ours we were told that we MUST have life insurance, as in it's not an option.

Now there's a clear difference between must have & good practice to have.

I'm asking this because obviously we took out life insurance. We bought our house around 10yrs ago. My sister bought her house about 1yr ago & was told they didn't NEED to take out life insurance .... and so they didn't.

I'm just wondering whether we were told correctly or whether it's just something that's better to have than not but you don't need it.

 Different banks different rules. Or even a change of policy 

user1977

marcia_ said:

B0bbyEwing said:

When we bought ours we were told that we MUST have life insurance, as in it's not an option.

Now there's a clear difference between must have & good practice to have.

I'm asking this because obviously we took out life insurance. We bought our house around 10yrs ago. My sister bought her house about 1yr ago & was told they didn't NEED to take out life insurance .... and so they didn't.

I'm just wondering whether we were told correctly or whether it's just something that's better to have than not but you don't need it.

 Different banks different rules. Or even a change of policy 

It’s been a very long time since any banks required you to have life insurance for a mortgage - certainly more than 10 years.

So if the OP means that eg a mortgage advisor said it was compulsory, it sounds like they were missold the insurance. If it was merely recommended to them, that’s (possibly) a different matter.

eddddy

As far as I'm aware, lenders don't insist on borrowers taking out life insurance.

There's an article here (from 2019) that suggests 3 out of 10 borrowers are wrongly told that they must take out life insurance: 
https://www.thisismoney.co.uk/money/mortgageshome/article-7180843/Homebuyers-told-mortgage-buy-life-insurance-income-protection.html


Life insurance for a single person with no dependents might not make sense.

Also, somebody with a serious heart condition told me that no insurance company would offer him life insurance, so he had to get a mortgage with no life insurance (even though he had a wife and family). There was no other way he could buy a house.

lisyloo

it sounds as though you misled on the face of what you've said.
it's not a legal requirement like vehicle insurance.
it's generally a very good idea.
Are you sure you are correctly remembering the exact words and context from 10 years ago?

For example I could quite easily say if you have children or intend to have children then surely you MUST (morally) have life insurance. That doesn't make it a legal requirement.

We can't know the context in which this word was used or whether you are remembering the context correctly from 10 years ago especially if it verbal/memory.
You may have been misled.

What documentation do you have?

I did win an endowment mis-selling claim based on what was said verbally but they were widely mis-sold and this was before paperwork was tightened up. It's very likely you signed something to say you read and understood what you were buying which will be thrown back at you, so you need to look at what you have in writing (and any emails if you have them from 10 years ago).

eddddy

lisyloo said:

it's not a legal requirement like vehicle insurance.

But even if there is no requirement in law to have life insurance, can mortgage lenders make it a contractual requirement?

Or does the law (or the regulator) forbid mortgage lenders from making it a contractual requirement?

For example, can a mortgage lender say "There is no law saying you must have life insurance, but we've decided to make our own rule that if you want to borrow from us, we require you to have life insurance."

marcia_

eddddy said:

lisyloo said:

it's not a legal requirement like vehicle insurance.

But even if there is no requirement in law to have life insurance, can mortgage lenders make it a contractual requirement?

Or does the law (or the regulator) forbid mortgage lenders from making it a contractual requirement?

For example, can a mortgage lender say "There is no law saying you must have life insurance, but we've decided to make our own rule that if you want to borrow from us, we require you to have life insurance."

 Thats my thoughts. We were definitely told must have insurance 12 years ago.

user1977

marcia_ said:

eddddy said:

lisyloo said:

it's not a legal requirement like vehicle insurance.

But even if there is no requirement in law to have life insurance, can mortgage lenders make it a contractual requirement?

Or does the law (or the regulator) forbid mortgage lenders from making it a contractual requirement?

For example, can a mortgage lender say "There is no law saying you must have life insurance, but we've decided to make our own rule that if you want to borrow from us, we require you to have life insurance."

 Thats my thoughts. We were definitely told must have insurance 12 years ago.

In which case you were probably also mis-advised.

theartfullodger

May have been a mortgage requirement, but there's no general legal requirement to have.  I've bought at least 5 houses without any such cover..

(Consider e.g. a millionaire - not me - with 4 other properties buying for cash another flat for their mistress/toy-boy...or two flats, one for each)