Do I need life insurance before I can get a home loan?

Author

MyProperty

Most banks and financial institutions will require you to take out life insurance when you are granted a home loan - this is for a couple of reasons. Firstly, when you take out life insurance your loved ones will be able to continue living in the house if you pass away as the life insurance will pay out a lump sum to cover the outstanding payments. Not all banks or lenders however requires this but the risk of not having life insurance in place is too huge, wouldn't you agree?

How much cover do you need?

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If you only want to ensure your life insurance pays off the remaining debt on your home loan you will have to get enough cover to do so, if you want it to pay off other debts as well you will need to make the adjustments to include it as well. Keep in mind that the size of your loan will reduce each year and that you will need to make adjustments to your life insurance accordingly.

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