When you buy a home you need to consider how your family would live if you were unable to pay the bills. Even if you and your partner both work and contribute equally to the household expenses one partner may find it a struggle to cope on their own, particularly if there are children involved.
There are different types of cover you can buy. Whole life insurance is the most expensive and pays out the full sum insured whenever you die.
Term insurance, which is a cheaper alternative pays out a lump sum if you die within a specified period usually between five and 25 years. If you are still alive at the end of the term, no payment is made.
You can arrange for a policy to match the repayment term on your mortgage, so if you die before the end of the term, the payout will clear your debt.
And you can choose for the level of cover to decrease in line with your mortgage, meaning your monthly premiums will be cheaper.
Couples can take out a joint-life policy that will cover both of them. This is cheaper than taking out two individual policies, but typically only pays out on the first death.
Life insurance is easy to buy because once youve decided on the type of policy you want and the amount of cover, all you need to do is to compare costs and find the cheapest quote.
But it does pay to shop around as premiums have come down over the last few years, making it a very competitive market.
Life insurance is cheaper when you are young and healthy and premiums wont increase as you age.
How much life insurance you take out will depend on how certain you are of what your future will hold.
It doesnt have to be linked to your mortgage, or coincide with the mortgage term and you need to take other living expenses into consideration and recognise future financial circumstances too.
Use the life insurance calculator to help you work out how much insurance you need.
As you will probably be holding this insurance for many years it does make sense to review it from time to time to make sure you are still getting a good deal.
Be careful about changing insurers though, as your premiums quoted will increase with age and if you have any medical conditions they may have to be investigated and this could affect your premiums too.
