I'm committed to buying, do I need Life/ illness insurance now?

Posted on 5 May 2008

I am buying a flat in Dubai. I can meet the first 3 payments and I will then need a mortgage to cover the rest.   Although I won't need a mortgage for at least 8 months, I am concerned about insuring myself in case I became unable to get a mortgage, say due to illness etc.   Could you give me advice on what to do and general re: insurance with is required when taking out a mortgage?

Hi Rebecca,

Yes, Life assurance, or Critical illness insurance should always be put in place a the time of exchange, as this is when you are liable to pay the purchase price, regardless of what happens to you.  

Whether you have a mortgage now, or will have liabilities in the future, you can take a critical illness policy.  This pays out a lump sum on diagnosis of a condition.  The included conditions are fairly standard across insurance policy providers, but some cover more than others so you should ask your broker to give you some options: the cheapest isn’t always right for you.  

The other alternative, a Permanent Health Insurance Policy (PHI) pays out a monthly amount of you are diagnosed with an illness, but I don’t think this will be of use to you right now as you could not use it as income when applying for a mortgage.

Charcol uses a panel of providers if you would like to give one of our advisors a call on 0800 358 5568.

Katie.

Category: Life assurance/ protection

 

Answers provided in response to Ask Bea are based on the information provided and do not constitute advice under the Financial Services & Markets Act. They reflect the personal views of the authors and do not neccessarily represent the views, positions, strategies or opinions of Charcol Limited. All comments are made in good faith, and neither Charcol Limited nor Bea will accept liability for them.

We recommend you seek professional advice with regard to any of these topics where appropriate.

Question