Hi

I am going to have a mortgage on my own fairly soon. I have no children either. Do I need to worry about life insurance to cover the mortgage? If I die, will the debt die with me or will my family have to sell the property and repay the mortgage with the proceeds?:huh:

I would like some reassurance about this. Obviously I would not want to leave my family having to deal with a messy situation but if the debt will die with me, then I think I would rather save the £20+ a month and spend it myself!!

I am in the same situation. However things are not as bad as they seem. I was told to take out life assurance when I took out my mortgage some years ago, this builds up into a fund, and you can cash it in at the end of your mortgage term.

If you have the mortgage on a repayment basis then there is no requirement for you to have life insurance to pay off the debt. BUT, some companies can insist on it if you are borrowing a high amount say over 75% of the purchase price of the property. It is worth checking with individual companies when choosing who to borrow from as it can add up to a lot of money over the years.

This is a different thing entirely from life assurance taken out with a view to building up a fund which 'pays off' the capital sum at the end of the mortgage term, known as an endowment mortgage.

Take the money and spend it on yourself!

Of course the mortgage debt won't just die with you! Neither will any other debts you have, be they credit card bills, overdrafts, or outstanding utility bills.

If you die, then any debts have to be paid out of your estate, which would probably mean selling house, car, etc, before the remainder (if there is a remainder) goes to whoever you've left it to.

As far as I know, if there isn't enough money in your estate to cover all your debts, your parents (or whoever else is the beneficiary) can't be held be responsible for them.

check the small print of your policy - you may find that a policy that covers your mortgage payments if you get cancer could be useful whilst you're still here but unable to work ;)

That would be PPI though, not Life Assurance

If I die, will the debt die with me or will my family have to sell the property and repay the mortgage with the proceeds?:huh:

I'm afraid your family (or the mortgage company) will have to sell the house to repay the mortgage.

I'm not sure what happens if you die in negative equity, whether your beneficiaries have to cover the shortfall, for instance?

A policy that builds up a fund that you receive at the end of the term will also give you life cover and a useful lump sum at the end that you can use for whatever purpose you want, provided the mortgage is paid off.

I'm afraid your family (or the mortgage company) will have to sell the house to repay the mortgage.

I'm not sure what happens if you die in negative equity, whether your beneficiaries have to cover the shortfall, for instance?

A policy that builds up a fund that you receive at the end of the term will also give you life cover and a useful lump sum at the end that you can use for whatever purpose you want, provided the mortgage is paid off.


Going on 'past performance' and assuming the poster intends to remain single I wouldn't bother with an endowment, I've had three all a waste of space, best thing I did was cash them in.

Hi

I am going to have a mortgage on my own fairly soon. I have no children either. Do I need to worry about life insurance to cover the mortgage? If I die, will the debt die with me or will my family have to sell the property and repay the mortgage with the proceeds?:huh:

I would like some reassurance about this. Obviously I would not want to leave my family having to deal with a messy situation but if the debt will die with me, then I think I would rather save the £20+ a month and spend it myself!!

Life cover not essential you may consider long term income protection etc.

Going on 'past performance' and assuming the poster intends to remain single I wouldn't bother with an endowment, I've had three all a waste of space, best thing I did was cash them in.

I have an endowment policy which as provided life cover for the last 23 years and in two years time as a projected lump sum payouts of £1500, £3000 or £6000.

If the payout is at the bottom end I get a nice holiday paid for, if it’s at the top end I could be looking at a new car, how is that a waste of space.

Life cover may not be a issue at the moment but if a partner and children come on the scene things can soon change and that £20 a month can only get higher the longer a decision is but of .

I have an endowment policy which as provided life cover for the last 23 years and in two years time as a projected lump sum payouts of £1500, £3000 or £6000.

If the payout is at the bottom end I get a nice holiday paid for, if it’s at the top end I could be looking at a new car, how is that a waste of space.

Life cover may not be a issue at the moment but if a partner and children come on the scene things can soon change and that £20 a month can only get higher the longer a decision is but of .


I didn't need life cover so that was one element that was a complete waste for me. Two of the three policies were from one of the worst performing life companies that have ever existed, none of the three projected enough of a payout to cover the original sum assured, all had shortfalls.

The last one I cashed in we used to help buy an old shop/flat for £85k which is now returning about £9.5k pa in rent and is worth a conservative £160k.

I do usually qualify my posts with an 'if it applies to you' or IMO, or 'in my situation'.

Life cover is a 'nice to have' rather than essential for a single person, but if your circumstances change in a few years, it could be more expensive to start a policy as you'll be older. Also your grieving relatives will be left with the hassle of selling your house to repay the mortgage (and going through probate if you haven't made a will) and if there is a shortfall in your assets vs debts, the responsibility DOES fall to your next of kin I'm afraid. Critical Illness would be much better for you - pays you a lump sum if you're diagnosed with cancer/heart disease etc - things that aren't necessarily fatal but could mean you can never work again/need respite care. YOU would benefit from that policy if it had to pay out, and would be sure of a roof over your head. Don't think for a minute that a bank wouldn't repossess your house just because you are too ill to work. Of course, it's entirely up to you what you decide to do, but if you choose not to have cover, at least it's best to do so with your eyes fully open.

Life cover is a 'nice to have' rather than essential for a single person, but if your circumstances change in a few years, it could be more expensive to start a policy as you'll be older. Also your grieving relatives will be left with the hassle of selling your house to repay the mortgage (and going through probate if you haven't made a will) and if there is a shortfall in your assets vs debts, the responsibility DOES fall to your next of kin I'm afraid. Critical Illness would be much better for you - pays you a lump sum if you're diagnosed with cancer/heart disease etc - things that aren't necessarily fatal but could mean you can never work again/need respite care. YOU would benefit from that policy if it had to pay out, and would be sure of a roof over your head. Don't think for a minute that a bank wouldn't repossess your house just because you are too ill to work. Of course, it's entirely up to you what you decide to do, but if you choose not to have cover, at least it's best to do so with your eyes fully open.


Thanks for all of the advice everyone. I need to shop around but I do think I am going to take out some form of cover- maybe even the endowment type as opposed to the straight forward premium type (the lump sum does appeal to me).

I do need to probably thing about some form of income protection. Unforutnately due to my family medical history, critical illness policies are prohibitively expensive.

Life cover is a 'nice to have' rather than essential for a single person, but if your circumstances change in a few years, it could be more expensive to start a policy as you'll be older. Also your grieving relatives will be left with the hassle of selling your house to repay the mortgage (and going through probate if you haven't made a will) and if there is a shortfall in your assets vs debts, the responsibility DOES fall to your next of kin I'm afraid. Critical Illness would be much better for you - pays you a lump sum if you're diagnosed with cancer/heart disease etc - things that aren't necessarily fatal but could mean you can never work again/need respite care. YOU would benefit from that policy if it had to pay out, and would be sure of a roof over your head. Don't think for a minute that a bank wouldn't repossess your house just because you are too ill to work. Of course, it's entirely up to you what you decide to do, but if you choose not to have cover, at least it's best to do so with your eyes fully open. My bold

According to this, (http://www.direct.gov.uk/en/MoneyTaxAndBenefits/ManagingDebt/DebtsAndArrears/DG_10013093) the only responsibility is to ensure that, if there isn't enough money, the debts are paid off in the proper order and beneficiaries aren't paid out before debts are settled. Next of kin do not have to pay the debts themselves.