Insurances are usually the last thing people think about when buying their new home and often there is some confusion around which are required, and which are optional.
Contrary to popular belief, life insurance is not a legal requirement when getting a mortgage. The only insurance you must have by law is buildings insurance.
Buildings insurance covers your home against any structural damage, i.e. damage to the walls, floors, or roof. It does not cover the contents or furnishings. If you want to cover the items inside your home in case of flooding or a fire, for example, additional contents insurance is required.
Lenders need to know that they can recover the value loaned to you should be unable to pay your mortgage. Without buildings insurance, if damage occurred to your property and you were unable to afford to have it repaired, the value of your home would decrease. This would leave the lender out of pocket, as they would be unable to recover the amount they loaned you to buy it. This is why buildings insurance is a legal requirement, but it’s also a good insurance to have anyway since your home is likely to be your most valuable asset.
The most common reason people opt to get life insurance is to ensure that their family could continue to pay the mortgage in the event of their death. To lose a family member would be bad enough, but to be forced to leave the house you shared with them would be doubly devastating. Life insurance protects your dependents from this awful scenario by providing them with the means to pay the mortgage if the worst should happen.
Income protection insurance is another common form of cover which protects your income if you are unable to work. If you would struggle to pay your mortgage and/or bills in the event of losing your wage, income protection insurance is worth consideration. In the event that you are unable to work through illness or injury, it ensures that you still receive an income until you are well enough to return to work. This could be a lifesaver during what would already be an incredibly stressful time.
People sometimes think that their employer’s sick pay would be enough to survive on, but what if you were unable to work for a long period of time? Most sick pay is limited to a certain timeframe (the length of which should be highlighted in your contract), whereas income protection insurance can pay out for years, providing significantly more peace of mind.
At Key Mortgage Advice, we cover a whole lot more than just mortgages! In fact, we can advise you on all the mentioned insurances, and even help you to find the best deal from thousands of available products. If you’re unsure as to which insurances you need, or what type of cover is best for your circumstances, use the button below to arrange a free consultation and we’ll talk it through with you!
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