While having Life Insurance as a homeowner is not compulsory, it is one of the best forms of insurance you can invest in when you buy a house.Not only does a Life Insurance policy protect you, your spouse and your family against financial strain in the event of an unexpected death. If one of the insured persons on the life insurance policy passes away, the cover payout can be used to pay off the mortgage.
When you buy a home you become financially responsible for making mortgage payments. If two steady incomes are required to meet those mortgage payments then ideally, you’d would want to have a life insurance policy in place as a form of financial protection.
The true risks of not having a life insurance policy as a homeowner are that if you were suddenly reduced to one income through the loss of a partner you may no longer be financially able to pay your mortgage. In the worst case scenario, this could mean you are forced to sell your home. Or alternatively, the bank may take possession of your home and force a mortgagee sale.
As well as having a Life Insurance policy you will also want to invest in Home and Contents insurance.
Home and Contents insurance can cover the cost of repairing or replacing your home in the event of fire, high winds and vandalism. It can also protect the contents of your home; electronics, furniture, chattels and other valuables. However, in order to claim for accidental damage i.e stains on the new carpet, you’ll also need to ensure your policy includes accidental damage cover.
When you purchase your house and contents cover, you’ll be able to select how much cover you would like to have. Bear in mind; the higher your level of cover the higher the premiums, however depending on the insurance policy you may need enough to enable a full rebuild
The best time to get your Life and House insurance policies is as soon as you’ve signed the Sale and Purchase Agreement and been handed the keys to your new home. That way you’ll know exactly what your financial commitments are how much you’re likely to need if you’re forced to rebuild.
It might be tempting to get cover before you’ve even bought a house. And you can. There’s no harm in having a Life Insurance policy if you’re in long term relationship and living together in a rental property. However when you do finally take out a mortgage and buy your first home, it will pay to reassess your level of Life Insurance cover, as your needs are likely to have changed.