Buying a home is one of the biggest financial commitments many people make in their lifetime.
As you prepare to complete on your house, it’s important to think beyond the deposit and mortgage payments specifically about the types of protection insurance that can safeguard your home and your family’s future.
This blog explains:
- The key types of protection insurance available in the UK
- Why protection insurance matters before completion
- How different policies can support your mortgage and family
- What to consider when choosing cover
- Why professional advice can help you make the right decision
Why Is Protection Insurance Important Before Completion?
When you exchange contracts and set a completion date, your mortgage lender will usually require you to have buildings insurance in place.
This type of insurance covers the physical structure of your home against damage, like fire or flood.
But what about the financial risks to you and your family if something unexpected happens?
Protection insurance helps to cover your mortgage payments or other essential expenses if you can’t work due to illness, injury, or death.
Having the right cover in place before you complete can help:
- Protect your loved ones from financial pressure
- Support mortgage payments if income is affected
- Reduce the risk of falling behind on essential bills
- Provide financial support during illness, injury, or death
- Give you peace of mind before taking on a major mortgage commitment
Key Types of Protection Insurance to Consider
There are three main types of protection insurance relevant when buying a house:
- Life Insurance
- Critical Illness Cover
- Income Protection Insurance
1. Life Insurance
What is it?
Life insurance pays out a lump sum if you die during the term of the policy.
This payout can be used to:
- Pay off your mortgage
- Support your family financially
- Cover essential household costs
- Reduce financial pressure on loved ones
Why do you need it?
If your income is essential to the household, life insurance helps ensure that your family is not left struggling to pay the mortgage or other bills.
It protects your loved ones from financial hardship if the unexpected happens.
Example
Sophie and James are first-time buyers purchasing a £250,000 home.
James is the main earner, and they decide to take out life insurance on his life for the full mortgage term.
Sadly, James passes away unexpectedly a year after completing on the house.
The insurance payout pays off their mortgage in full, allowing Sophie to stay in their home without financial burden.
2. Critical Illness Cover
What is it?
Critical illness cover pays out a lump sum if you are diagnosed with a serious illness covered by the policy.
This can include conditions such as:
- Cancer
- Heart attack
- Stroke
- Other serious illnesses covered by the policy
Why do you need it?
If you become seriously ill and can’t work, this payout can help cover:
- Mortgage payments
- Medical expenses
- Household bills
- Recovery costs
- Home modifications you might need
Example
Mark had just completed on a new flat when he was diagnosed with a severe heart condition.
Because he had critical illness cover, Mark received a lump sum that helped pay his mortgage and living costs during his recovery.
3. Income Protection Insurance
What is it?
Income protection insurance replaces a portion of your income if you’re unable to work due to illness or injury.
This can often continue until:
- You return to work
- The policy term ends
- You retire, depending on the policy
Why do you need it?
This cover helps you keep up with mortgage payments and day-to-day bills if you can’t work.
It can help reduce the risk of falling behind on your finances during a difficult period.
Income protection insurance can help with:
- Mortgage payments
- Utility bills
- Food and household costs
- Transport costs
- Other essential monthly expenses
Example
Emma bought her house and took out income protection insurance.
A few months later, she broke her leg in an accident and was off work for several months.
Her income protection cover paid her a monthly amount to cover mortgage payments and essentials until she returned to work.
When Should You Arrange These Policies?
It’s ideal to have protection insurance in place before you complete on your home.
Some mortgage lenders require proof of buildings insurance before completion, and protection insurance offers an extra safety net.
Waiting until after completion can leave you vulnerable if anything unexpected happens during:
- The buying process
- The early months of your mortgage
- A period where your savings may already be stretched
- A time when your household has taken on a new financial commitment
How Much Cover Do You Need?
The right amount of cover varies based on your circumstances.
When deciding how much protection insurance you may need, consider:
- Your mortgage amount and term
- Your family’s financial needs
- Any other debts
- Your current income
- Your monthly expenses
- Your savings
- Your other financial resources
- Your job stability
- Your household responsibilities
For example, if you have a £200,000 mortgage over 25 years, life insurance that covers this amount for the term of your mortgage is a good starting point.
Additional cover for critical illness or income protection can be tailored based on your risk tolerance and job stability.
Important Things to Remember
Before choosing protection insurance, it is important to keep the following points in mind:
- Check policy definitions carefully: Definitions of illnesses or what counts as “unable to work” can differ between providers.
- Review your policies regularly: Life changes like having children, changing jobs, or paying off your mortgage affect your insurance needs.
- Be honest on applications: Accurate information helps avoid claim problems later.
- Combine policies where possible: Many insurers offer packages for life, critical illness, and income protection to simplify costs.
- Get professional advice: Protection insurance is not “one size fits all.” What suits your friend or neighbour may not suit you.
Summary: Protect Your Home and Family Before You Complete
Buying a house is exciting, but it can be overwhelming.
Protecting your family and your investment with the right protection insurance should be one of your top priorities before completion.
The main types of protection insurance to consider are:
- Life cover
- Critical illness cover
- Income protection insurance
This insurance provides peace of mind, knowing that you can continue to meet mortgage payments and financial commitments even if life throws you a curveball.
Need Help Finding the Right Protection Insurance?
Choosing the right protection insurance can be confusing.
At BSL Assured, we specialise in helping people in the UK find insurance that suits their needs and budgets without jargon or pressure.
If you’re about to complete on a house or want to check your protection options, get in touch with BSL Assured today to discuss your situation with a friendly expert.
Please note: This blog is for general information and does not constitute regulated financial advice. Always consider speaking to a qualified insurance adviser about your personal circumstances.