property insurance

 

What insurance do I need for my mortgage?

You’ll need buildings and content insurance and should seriously consider life insurance too.

 

Building and contents insurance

When banks lend you the money to buy a property, they need to know that it’s a good investment. That means that when certain things happen to a building, it’s insured to be rebuilt. Most lenders ask that they are named on the policy.

The contents part refers to what you keep in it. If you turned the house upside down, what would fall out? All that needs to be covered. NM Money recommends making a list on a spreadsheet with rough costs and ideally pictures of expensive items over £1000 and backing the file up externally. That way, if you ever have a problem, you can pop the sheet off to the insurer.

It’s important to name anything over £1000, although this varies between insurers. You also need to ask what isn’t covered by the policy.

 

Life insurance

There shouldn’t be a taboo when discussing life insurance – it’s indispensable if you are critically ill or pass away. It leaves you without the worry if you can’t pay your bills and gives your family time to grieve and not concern themselves with a huge mortgage if you die. It’s also optional.

Life insurance can be a bit tricky, so you’ll need to have a chat with an insurance expert to make sure you get the right policy. Decreasing-term policies are the norm, as the cover decreases in line with your mortgage. However, there are also level-term and whole-of-life. The former is cover that remains the same (doesn’t decrease) and whole-of-life is cover for your lifetime and costs more – it’s up to you.

 

How much does insurance cost?

Insurance costs vary widely; you are quoted based on the amount and type of cover you require plus your age and health status.

 

Do I need life cover?

It’s worth considering what other policies you have through your employer, as you may have death-in-service cover. If it wouldn’t cover everything though, you may still need extra insurance.

Remember, life insurance is advisable but not compulsory. You do need building and contents insurance.

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