Mortgage Insurance in the UK
Advice on the Insurance you need for your UK mortgage
There are many Insurances associated with taking out a mortgage, building & contents, life insurance, critical illness insurance and accident, sickness and unemployment. However building cover is the only one which is compulsory with most lenders not allowing a mortgage to complete until this cover is in place. In the event that the property is badly damaged by fire, flood etc it is very likely that the contents would also be damaged and so it makes sense to take out contents cover as well.
Life insurance although not compulsory is always recommended so that should the person covered die or be diagnosed with a terminal illness the mortgage would be paid off thus removing the need for any remaining spouse or heirs to sell the property if they were unable to get a mortgage.
An additional add on to a life policy is critical illness which covers such things as cancer, strokes and other major illnesses. With critical illness cover there is no necessity for the illness to be terminal as the insurer will pay out when the critical illness is diagnosed. In both instances cover can be taken on a decreasing or level term basis.
A decreasing cover would normally be recommended as cover for a repayment mortgage and a level term for an interest only mortgage. Accident, sickness and unemployment cover is again not compulsory but is recommended especially for those who have very little job security or those whose employer only pays minimal sickness benefit or none at all.
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