Just because you aren’t married and choose to settle down with kids means Life insurance doesn’t apply to you. Even if you are single, there are good reasons to take out life cover.
Having a life policy in place can support your family dealing with your debts, i.e. mortgage repayments if the most unfortunate happened to you.
Life cover gets taken out to cover mortgage debts: typically, the policy will set up to pay out a lump sum, equivalent to the home loan, in the event of the policyholder’s passing.
If you live with a partner or have children, the cover might get extended to provide an income that your dependents can use to pay for living costs.
This extra protection is unlikely to be necessary for single people, but taking out insurance covers the mortgage is still a good idea.
If an individual passes before their mortgage gets paid off, their bank or building society can attempt repayment of the loan from their late customer’s estate — this is their accumulated assets.
Most likely, to pay off the remaining balance, the property will get sold. But if the home is in negative equity, the lender has the right to demand that the difference gets made up from the estate.
The other alternative is that the lender can demand that the property gets sold. But the surviving family members cannot continue to make up any shortfall. To make matters worse, if the probate process — during which the individual’s estate gets dealt with — is drawn out, the lender can continue to add interest charges, increasing the total amount.
Taking out life insurance will help make sure that these problems do not proceed.
If you think you might want to take out life cover at some point, speak to one of our dedicated protection advisors in Birmingham. For example, if you plan to become a First Time Buyer in Birmingham or already a homeowner, or perhaps your circumstances have changed. It makes financial sense to do so now rather than waiting.
A life insurance policy means that an inheritance can be left to children or grandchildren, for example, irrespective of whether there is any equity left in the home.