WITHOUT ADEQUATE PROTECTION, ONE SINGLE INCIDENT, SUCH AS FIRE OR BURGLARY, COULD HAVE A DEVASTATING EFFECT ON YOU AND YOUR HOME.
Insurance can’t stop the incident happening, but it can help put things back the way they were – quickly and with the minimum of fuss. Whether you are buying a home, own a property or are renting, your home and possessions are precious.
Your home contains all your belongings, memories and comforts. Choosing to insure them, and making sure you have the right insurance products for your circumstances, will offer peace of mind and can lower the financial pain of repairing your home and replacing damaged or stolen possessions.
Buildings and contents insurance is also often referred to as ‘home insurance’, a combination insurance that covers both your building and its contents in one.
BUILDINGS INSURANCE
Buildings insurance isn’t a legal requirement, but it will be required by your mortgage lender. It protects the actual building you live in, for example, the roof, walls, windows, doors, etc.
The type of incidents that buildings insurance may cover are fire, flooding and subsidence. You could receive a payment to cover damage to any part of the structure of your home, which includes built-in furniture such as fitted kitchens and wardrobes, but not removable content such as furnishings. In the worst case, if your home was destroyed and must be rebuilt, buildings insurance is the policy designed to cover that cost.
To be totally confident that your home is adequately insured, an independent surveyor can calculate the exact rebuilding cost of your home.
Do you have to have home insurance with a mortgage?
CONTENTS INSURANCE
Contents insurance protects the contents of the building you live in, for example, your possessions, valuables and furnishings that are not permanently attached to the building. It typically covers loss of or damage to items due to fire, theft, flooding, etc. The exact incidents covered, and the items covered, will differ between policies.
You can often pay extra to insure items even when they are lost or damaged by accident, or when they are outside your home. Otherwise, these incidents aren’t usually covered.
MORTGAGE PAYMENT PROTECTION INSURANCE
Mortgage payment protection insurance protects your monthly mortgage repayments for up to one or two years if you can’t work through accident or sickness, typically up to a maximum of 65% of your monthly income.
Without this cover, you could lose your home if you cannot keep up with your repayments.
LIFE INSURANCE
Life insurance protects your family’s lifestyle in case of your death or the diagnosis of a specified critical illness. It can pay out a tax-free lump sum or regular payments to help them cope without your income, which may allow them to stay in your current family home. Mortgages can be protected using a mortgage protection life insurance or level term insurance.
Level term insurance is a life insurance policy which pays out a fixed sum of money if the policy holder dies within the term of the policy. It is less expensive than whole life insurance, but does not have any cash value if the policy holder survives beyond the term. Level term insurance is most commonly used to protect mortgages, as it guarantees that the mortgage will be paid off in case of the death of the policy holder.
Decreasing mortgage term insurance is a way of ensuring that your family will be able to continue living in the home you have purchased even if something happens to you. It is a life insurance policy that will pay off the mortgage in the event of your death, so that your loved ones don’t have to worry about how they will keep up with the payments. This type of policy is decreasing term insurance, which means that the coverage decreases over time as your mortgage balance goes down. This can be a good option for people who are looking for a more affordable life insurance policy, as the premiums will be lower than with a level term policy.
Do you need life insurance when getting a mortgage?
INCOME PROTECTION INSURANCE
Income protection insurance is a type of insurance that provides you with a regular income if you are unable to work because of an illness or injury. It can be used to protect your income in the event that you are unable to work for an extended period of time, and can provide a valuable safety net for you and your family.
It can provide a monthly payment, linked to your salary, to help you cover costs that could include your mortgage repayments plus other regular bills. There are several different types of income protection insurance policies available, so it is important to compare your options and find the policy that best suits your needs.
