Confused with decreasing life insurance and mortgage

Ambyth

Is it a necessity to have life insurance with a mortgage?

I am currently paying a decreasing life insurance, which I thought had to be in place to satisfy mortgage suppliers (like buildings insurance).   

I don't have children and if my house was sold it would more or less cover what is left outstanding on the mortgage.

Am I paying an unnecessary bill (which we don't want )

CrazyBee787

It certainly sounds like it, When I got my mortgage they didn't say I needed life insurance and I don't have. I don't know what are the terms with your mortgage provider but it would probably be wise to go straight to the bank  or building society and ask if it was necessary, I am sure for most it is not if at all? On a personal level your partner may be glad that it is paid for if you are married, especially if you die and they are left single then lose their job or can't make payments, If you leave the house to them that is, however I probably wouldn't because I am not paid enough...Perhaps someone here will be able to give you a more definitve answer. 

Keep_pedalling

You say we don’t want, which suggests you have a partner living with you and I would have thought it would be in their interest not to have to sell up on your dimise.

Aretnap

In days of yore banks would insist on life insurance to cover a joint mortgage at least, mostly because they didn't want to be seen to be evicting grieving widows from the family home when they couldn't keep up the repayments without the main breadwinner. 

Nowadays I believe it's rarely a condition of a mortgage, however it's still very sensible to consider whether your partner (I assume there's a partner as you said "we") would be able to keep up the payments on a single income, or be happy to be turfed out of the home shortly after you had died unexpectedly.

Emmia

Are you and your partner/spouse covering the payments on the mortgage - can you both afford it in your own right if one of you died?

We have insurance so the survivor doesn't need to worry about the mortgage. As we've made over payments the potential payout is now a fair chunk more than the mortgage - but reducing the payout doesn't affect the monthly cost overly (~£3 a month each,  the one time we did this) and is a total faff so we've not bothered since.

Ours also has critical illness cover. Financially illness preventing work would probably be worse than a death.

Brie

You may have sufficient cover elsewhere.  Through work etc.  But you might also want to just get a stand alone policy that would provide a cushion if one of you has a run in with a bus or something.

Ambyth

Thanks everyone

DullGreyGuy

Ambyth said:

I don't have children and if my house was sold it would more or less cover what is left outstanding on the mortgage.

Am I paying an unnecessary bill (which we don't want )

Who does your home go to in the event of your death? Would they want to have to sell it to pay off the mortgage? Could they afford the mortgage themselves? Do you care too much if you're dead?

Assuming you have terminal illness cover, what happens if you've given 9 months to live tomorrow? Do you have savings to pay your mortgage for the last few months? Do you have some other protected income to pay it? 


There are plenty who have a mortgage and no life insurance no matter their home circumstances. There are those that intend to leave their home to a charity and yet still want to keep the insurance to maximise what the charity were to get if they died early.  It's all down to personal preferences and situations.