Do you need life insurance to get a mortgage?

When you're buying a home, it's easy to get lost in all the paperwork and costs. One thing that often comes up is life insurance. Do you need it for a mortgage? The short answer is no; it’s not a must-have. But it can be a good idea.

What is life insurance?

Life insurance is a way to help your loved ones if you die. It gives them money that could be used to pay off your mortgage, so they don't have to worry about losing the home.

Do mortgage lenders ask for life insurance?

Most mortgage lenders do not make you take out life insurance. But some might suggest it, especially if you're borrowing a lot of money. They want to make sure the mortgage will still be paid if something happens to you.

What cover do you need when getting a mortgage?

It’s not easy to think about worst-case plans. But it can help to picture what would happen if you were no longer here. If you want life insurance for your mortgage, the most common type is Decreasing Life Insurance, which is also known as Mortgage Life Insurance. It's designed to cover a mortgage that goes down over time. Another option is Term Life Insurance, where the amount of cover stays the same for a set number of years.

Find out more about decreasing and term life insurance.

If you’re buying with someone

If you're buying your home with someone, or someone relies on you such as a partner or child, life insurance can help protect them. It gives them a lump sum if you die, which could be used to pay off the mortgage. This means they could stay in the home without extra money worries. At a time when they’re already coping with a loss, life insurance can take away the stress of how to manage financially.

If you’re buying on your own

If you're buying a home on your own, it’s worth asking if your death would affect anyone financially. You’ll be missed, but would it leave someone struggling with money or needing to sell the home? Life insurance can help you leave money for a loved one to pay off the mortgage. This could make it easier for them to keep the home without extra stress.

What about critical illness cover?

We’ve talked about what happens if you die. But what if you become seriously ill and cannot work?

Critical illness cover can be added to life insurance. It pays out if you're diagnosed with a serious illness like cancer, a heart attack or a stroke. It can help you keep up with your mortgage payments while you focus on getting better. This cover can give extra peace of mind, but it costs more.

In summary

You do not have to get life insurance for a mortgage, but it can be a smart move. It helps your family keep the home if something happens to you. Think about your situation and what feels right for you.

Find out about Life Insurance from Co-op.