Short answer: No, you don't need life insurance to buy a house - but as a homeowner, life insurance is a very good idea. If you're hunting for your first home, here are some key things to know.
Can you get a mortgage without life insurance?
Unlike house insurance - which is a requirement of all mortgage lenders in New Zealand - you don't have to have life insurance in place when taking out a mortgage. However, this doesn't mean you shouldn't...
Just like welcoming a new child or getting married, buying a home is one of the key life events that can trigger the need for life cover.
Why life insurance is important for homeowners
Buying your own home is an exciting turning point, and it's so much more than four walls. It provides a place of comfort, safety and happy memories. It allows your family to put down roots and thrive.
Many Kiwis achieve their home ownership dreams with a mortgage - a helpful tool to get on the property ladder faster, but also a large, long-term financial commitment. How would your family cope financially if you were no longer around? Would they still be able to keep up with mortgage repayments as well as their everyday expenses?
Life insurance can help your family keep a roof over their head, protecting this investment of money, time, and love.
How does life insurance work?
It's pretty straightforward. In the event of your untimely death (or terminal illness, depending on your policy), life insurance provides a lump-sum amount that can be used to cover different costs - including mortgage payments.
How much life insurance do you need?
The answer to this question depends on your family's circumstances, financial needs and plans. You can use our calculator here to work out an indicative amount.
As a homeowner, a good starting point is to make sure the level of cover is sufficient to pay off the mortgage. Then, you can also factor in any other costs that your family may encounter - like your children's education, their lifestyle and your partner's retirement. And of course, keep your budget top of mind: short and long-term affordability is a key component in the life insurance decision.
Like to explore your options? Click here to compare quotes from different providers - it only takes a minute, but it could be worth a lifetime.
Other insurance types to consider
If you're buying a house, life insurance isn't the only type of cover worth considering. Depending on your situation, you may also look at income protection, mortgage protection, and health insurance (to name the most common). Each of these provide different benefits, which you can use alone or in combination with one another.
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Disclaimer: Please note that the content provided in this article is intended as an overview and as general information only. While care is taken to ensure accuracy and reliability, the information provided is subject to continuous change and may not reflect current development or address your situation. Before making any decisions based on the information provided in this article, please use your discretion and seek independent guidance.
