Taking out life insurance may not be a legal requirement if you have a mortgage, but it certainly is sensible to have it.
The benefits
When applying for a mortgage, proof of cover could make you a stronger candidate in the eyes of a lender because they know that, in the event of your death, you have mortgage protection and other members of your household would be protected.
Not only does life insurance provide financial security, but it offers some peace of mind knowing that your loved ones would be able to stay living in their home without debts to pay off, with mortgage protection.
Who needs it?
Regardless of your circumstances, life insurance is advisable for all mortgage holders, to ensure mortgage protection – whether you’re a first-time buyer or moving up the property ladder and taking on a larger mortgage. Even those who are currently single with no dependents should consider it, as circumstances could change (e.g. by getting married or becoming a carer for a family member).
Types of life insurance
There are two main options to consider – decreasing term or level term life insurance. Decreasing term is often used by those with a repayment mortgage, as the potential payouts decrease over time to reflect the amount left to pay on the mortgage.
With level-term insurance, you decide how much cover you want, and your loved ones will get the full payout if your death occurs within the term. Unlike decreasing term, level-term life insurance can cover the costs of more than just a mortgage.
We can advise on the most suitable protection for your unique requirements.
Get in touch
As experienced Independent Financial Advisors, we are always ensuring we follow the most up-to-date standards. You can learn more about us here. If you’d like to learn more about insurance advice, please get in touch.
We are based in Eastbourne, East Sussex, but meet with clients (both online and in person) across the South East including Hastings, Lewes, Brighton, Bexhill, Uckfield, Heathfield, Newhaven, Seaford, Tunbridge Wells and further afield.
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The value of investments can go down as well as up and you may not get back the full amount you invested. The past is not a guide to future performance and past performance may not necessarily be repeated.
It is important to take professional advice before making any decision relating to your personal finances. Information within this blog is based on our current understanding of taxation and can be subject to change in future.
It does not provide individually tailored investment advice and is for guidance only. Some rules may vary in different parts of the UK; please ask for details. We cannot assume legal liability for any errors or omissions it might contain. Levels and bases of, and reliefs from, taxation are those currently applying or proposed and are subject to change; their value depends on the individual circumstances of the investor.
The value of investments can go down as well as up and you may not get back the full amount you invested. The past is not a guide to future performance and past performance may not necessarily be repeated.
If you withdraw from an investment in the early years, you may not get back the full amount you invested. Changes in the rates of exchange may have an adverse effect on the value or price of an investment in sterling terms if it is denominated in a foreign currency. Taxation depends on individual circumstances as well as tax law and HMRC practice which can change.
The information contained within the blog is for information purposes only and does not constitute financial advice.
