Some things can be enjoyed on their own but are better when combined.
Liam and Noel Gallagher are perfectly fine on their own, put them together and you get Oasis, one of the most influential bands of all time. A sandwich, a drink and a snack, unremarkable on their own, call it a meal deal and it’s a winning combination (pro tip: always get the expensive smoothie as a drink).
Just like these examples, life insurance and taking out a mortgage are better together. You don’t legally need to have life insurance when you take out a mortgage but if you have dependents, there’s a lot of reasons that make sense.
Why should you get life insurance when taking out a mortgage?
The first reason you should take out life insurance when getting on the property ladder is your mortgage payments would be covered by your insurance should you pass away, this means your partner and dependants can continue to live in their home.
Other debts could be paid off as well, like car payments, credit cards, personal loans and help ease the burden on your family.
You would also gain peace of mind knowing your family won’t have to dip into any savings or worry about paying for anything when you’re gone.
What type of life insurance is best for you?
There are multiple types of life insurance that can help your family if you pass away.
Decreasing term life insurance, like the name suggests, gets lower as time goes on. This is ideal for mortgages, so as you pay it off the lower the payout gets to match the remaining balance.
Alternatively, there’s fixed term life insurance, also known as level term, life insurance. This pays out a fixed amount to your family if you pass away within the term. Like a decreasing policy, it can be used to pay off your mortgage and help make sure your partner doesn’t have to rush back to work to be able to pay the bills.
What if you didn’t take out life insurance?
If you pass away without life insurance, your partner or dependants might have to dip into hard earned savings to keep up with mortgage payments.
The worst case scenario? may need to sell the family home and other assets to afford the mortgage payments. These uncertainties could cause a huge amount of mental and financial stress on your family.
What if I don’t have a mortgage?
If you rent, then the lump sum from your life insurance policy could be put towards your family’s rent and making sure they are financially secure for the future.
There are also other insurance products that might be more suitable to your situation, such as critical illness cover which can pay out if you are diagnosed with a serious illness during the policy term. Alternatively, there is income protection which pays out if you are unable to work due to illness or injury.
