I’m Buying A Property in Cardiff – Do I Need To Take Out Life Insurance?
At Fortis, we see clients every day who are considering purchasing a property in Cardiff and who have questions that they need to be answered. One question that often arises is “do I need to take out life insurance if I’m buying a property?” So, let’s take a look at that question and give you the answers you need.
Mortgage Protection Insurance – An Overview
Mortgage Protection, otherwise known as Mortgage Life Insurance, is an insurance policy to protect your family from any financial burden if the worst happens and you pass away. There are lots of different kinds of life insurance out there, but mortgage protection cover is quite specific. Some standard life insurance products cover your mortgage already, so it’s essential to check any policy that you already have in place before taking out Mortgage Protection as you could be duplicating your cover unnecessarily.
Am I Legally Obliged To Have Life Insurance If I Buy A House?
Legally speaking, there is no obligation to take out any kind of life insurance policy when purchasing a property. However, that doesn’t mean that you won’t be required to take out cover when you apply for a mortgage. Some lenders require you to put insurance in place before moving into the property. It’s important to be aware that, while some lenders may suggest a policy, you’re under no obligation to go with the insurer that they recommend. A better deal for you may be available elsewhere, so take the time to shop around.
Is Any Type Of Insurance Policy Essential When Purchasing Property?
While you may not be legally required to take out life insurance when buying a home in Cardiff, your lender is sure to require you to have buildings insurance in place before releasing your funds. Lenders need to know that the value of the property will never drop below the sum you have borrowed because of structural damage. Therefore, buildings insurance is key to releasing your funds.
Is Mortgage Protection Right For Me?
Although you’re not legally obliged to take out Mortgage Protection cover, there are some instances in which it could be a good idea for you, particularly if you have dependent family members who are relying on your income to make the mortgage payments. If you’ve already got a life insurance policy, check the coverage to see if your outstanding mortgage will be covered if the worst happens, and if it is, just make sure the policy outlasts your mortgage term so that you have complete peace of mind.
Are There Multiple Kinds Of Mortgage Protection Policies?
There are two categories of Mortgage Protection insurance – Level Term and Decreasing Term policies.
Most homeowners will go for a decreasing term policy as it’s likely to be more affordable than a level term insurance policy. With this kind of cover, the amount paid out will decrease in line with the remaining balance of your mortgage, which makes it only really suited to repayment mortgages. Conversely, a Level Term policy pays a fixed amount in a lump sum to the beneficiaries and could be a better choice for interest-only mortgages.
Mortgage Protection cover is just one of the topics that prospective buyers in Cardiff find confusing. If you have any queries relating to home buying, don’t hesitate to get in touch with our team at Fortis. Thanks to our expertise and experience in the field, you can be confident that we can help with any issues you are facing with regard to purchasing a property in the local area.
Give us a call today on 02920 561111.
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