When you take out a mortgage the lender will insist that you have life insurance. This will cover their investment if anything happens to you. So if you die, the insurance will pay off the remaining balance of the loan and so the house will be paid off. This insurance can add up to quite a bit of money over the term of the mortgage and so it is worth searching for the best possible prices. There are some things that you can do to keep prices lower.
Do it when you are young
One of the main factors that contributes to the cost of life insurance is age. Obviously the older you get, the higher the risk that you will die. Therefore, the younger you are the better the cost, in most cases and so it is good to take out a mortgage and life insurance when you are young.
Only insure healthy lives
If there are two of you wanting to purchase a house, then it is worth considering whether only one of you should be named and insured. If one of you have poor health, their insurance could be very high and so to avoid paying it, the mortgage could just be in one name. Of course, this is a risk as if the unnamed person dies and they are contributing to the family income, then the house will not be paid off and there will be no financial help. Also if the mortgage is only in one name, it could mean that you cannot borrow enough money to buy the house that you want. This is a risky decision.
Compare rates
It is well worth comparing rates between insurers to see who can offer the best deal. It can be tempting to go with the company that your lender recommends but they are unlikely to be the cheapest. Therefore you need to have a look around at all of the options and see which offers the best price for you.
Carefully consider add-ons
There are add-ons that you can purchase with your mortgage such as a mortgage protection policy. These will add cost to the premium and may not be necessary. Consider whether you will really need them. For example a mortgage protection policy will cover you if you are out of work and unable to pay the premiums. This is good if you are paying alone with no one else able to help and you are likely to be on statutory sick pay which may not provide you with enough money to cover the bills. However, there is a cap on the pay out and you therefore need to consider whether it will be enough to cover the mortgage. Also if you have someone else who can help cover the cost or have savings, then it may be better to have these to fall back on rather than paying for the insurance.
