Buying a house is a big step, regardless of whether it is your first or your tenth. There’s lots of paperwork, processes and expenses involved. One of the ones that can seem like something to maybe put off is life insurance. But that could be a mistake. You can make the process easier, however, by buying your life insurance from a mortgage broker.
What is life insurance for a mortgage?
There are two main types of life insurance available – common life insurance and mortgage life insurance. Each works a little differently:
Common life insurance – level term insurance where you pay a fixed payment over a set time period, normally 25 years. If you die during this time, your family gets a lump sum to pay off your mortgage and provide other living expenses. The pay-out is the same in year two as year 24 so the premiums are higher
Mortgage life insurance – decreasing term insurance where the amount of cover you needs decreases as the number of your mortgage decreases. This means the pay-out amount goes down and usually so too does the monthly payment. It proves a tax-free sum to clear any remaining mortgage if you die during the duration of the repayments
Do you need life insurance?
Life insurance isn’t compulsory like car insurance, but it is worth considering the consequences of not having it if something was to happen, especially if there is a primary earner in the family. Could the family continue to make payments if something was to happen to them and that income was lost? If not, then life insurance in some form is definitely worth considering.
Mortgage life insurance tends to be cheaper than common life insurance and is specifically aimed at paying off the mortgage if one of the couple dies. This means there’s no chance that you would have to sell the home if the primary earner passed away and you could no longer afford the payments.
Getting life insurance
There are various options to get life insurance if you decide that you need it. Your mortgage company may offer a package that includes it or as an optional extra. Just like buildings insurance, you don’t have to take it although they may state you need to provide proof of coverage from elsewhere if you don’t.
One of the best options is to get life insurance through a mortgage broker. This is because they can access a variety of products from different suppliers and find the best deal for you. Just like they do for mortgages, a broker can assess the products on offer and give you some ideas about the options for you to make a choice.
Protect your family
There’s no doubt that we are all trying to keep outgoings to a minimum, but the fact is, with a mortgage you need to think about the worst-case scenario. And that means taking some extra precautions such as life insurance to help cover the costs if the worst does happen.
Talk to the team at Rosebank today to find out the options for your personal circumstances.