THE TERRIFYING death tolls resulting from the coronavirus pandemic outbreak and war in Europe may be causing many of us to think about our own mortality, particularly if we are responsible for a family or business loan.
We would rather not consider the day when we will no longer be around, but these events have highlighted the importance of protecting the things that really matter – like our loved ones, home, lifestyle and business – in case the unexpected happens.
Life insurance provides a safety net for your family and mortgage.
None of us know what’s around the corner so it’s important to get the right life insurance policy.
What do I need to protect?
Your mortgage is probably the biggest financial commitment you will ever make, so it’s important to make sure your family can afford to keep up the mortgage repayments if you die.
If you have a partner or dependent children, they may struggle to keep up with the mortgage repayments on their own, especially if they have to take time off work to cope with your death.
A life insurance policy can help make sure they are not left struggling to make ends meet and at risk of losing the family home.
How much cover do I need?
The amount of life insurance you need depends on a number of factors, including:
- How much you owe on your mortgage
- Your family’s current and future income
- Any other dependents or financial commitments
How long will I need the cover for?
The length of your mortgage life insurance policy should match the term of your mortgage. So, if you have a 25-year mortgage, you should take out a life insurance policy that lasts for 25 years.
This will ensure your family is protected for the entire term of the mortgage, and they won’t have to worry about finding alternative cover if your policy comes to an end before the mortgage is paid off.
What happens if I have a joint mortgage?
If you have a joint mortgage, you will need to take out a life insurance policy that covers both of you, or you could have a policy each.
This way, if one of you dies, the other will still have enough money to keep up with the mortgage repayments on their own.
How does critical illness work?
Critical illness cover is a type of extra protection that you can take out with life insurance, or on its own. It is designed to pay out a certain cash sum while you are still alive, after being diagnosed with a ‘critical illness’.
How does critical illness insurance work?
Do you need life insurance for a mortgage?
The good news is that it’s not compulsory for you to take out a life insurance policy when getting a mortgage. It might be a very sensible thing to do, but it’s not a legal requirement. However, have you considered what happens to a mortgage when someone dies?
Do I need life insurance if I don’t have a mortgage?
You don’t HAVE to have life cover, but it is always a good idea to have some form of family protection in place.
If you have dependents or financial commitments that would be difficult to meet without your income, a level term life insurance plan can give you peace of mind that they will be taken care of if you die.
It can also help to cover the costs of your funeral and any other expenses that need to be paid after your death.
Do you have to have home insurance with a mortgage?
Get some advice
Obtaining some advice and knowing which products to choose – including the most suitable sum assured, premium, terms and payment provisions – is essential.
There is no one-size-fits-all solution, and the amount of cover – as well as how long it lasts for – will vary from person to person. Even if you consider that currently you have sufficient life insurance, you may probably need more later on if your circumstances change.
As you reach different stages in your life, the need for protection will inevitably change. How much life insurance you need really depends on your circumstances – for example, whether you have a mortgage, you’re single or have children, or you have business loans that you are liable to repay.
