Firstly, it is not usually compulsory to take out life insurance to protect a mortgage
but in many cases it is wise to consider this type of cover in any case, especially for joint mortgages or if you have a family to protect.
Joint mortgage life insurance
is a type of life assurance designed specifically to repay a mortgage loan should one partner pass away. The policy would payout once upon the death of the first partner and then terminate.
Taking out this type of plan means that if either partner were to die the mortgage loan could be repaid and the remaining partner (and family) would therefore not be left with the potential problem of having to meet unmanageable loan repayments on their own.
Do we both have to have life insurance? A common question is whether both partners need to have life cover for a joint mortgage, and the answer is no. In some cases it might make more sense only to take out life assurance for one partner rather than a joint plan. One example of this might be if only one partner works and pays the loan.
It is also worth noting that the additional monthly premium for taking out separate plans each rather than a joint term life insurance plan is only around 10 per cent more. As a joint plan would only ever payout once having a separate plan each (with the possibility of two payouts) can be an attractive option for such as small additional premium.
Finally, you may also like to consider adding critical illness cover
to your joint life assurance plan so the policy could also payout if either partner were to suffer a serious illness or injury (plans usually cover around 35 to 40 medical conditions).
This information does not constitute financial or other professional advice. You should consult your professional adviser or contact us directly on 020 8432 7333 should you require financial advice. It is important to ensure any insurance policy you take out is suitable for your needs.