Do I need life insurance when moving house​?

Moving home can be an exciting but also stressful time. It's also a good time to consider having a life insurance policy in place, if you haven't already.

If you already have a policy, it could be time to review your cover to make sure it still matches your current financial situation.

Whether you have a new mortgage or are renting, life insurance can offer financial protection for your loved ones if anything happens to you. In this guide, we'll look at why you might need life cover when moving home, as well as the types of policies available.

Why you might need life insurance when moving house

Anyone who has ever moved house before will know first-hand what a life-changing moment it can be. Most notably, you could be taking on a new mortgage, which you may wish to cover.

If you already have life insurance, you may wish to increase your cover so that it matches your mortgage.

Whereas if you don't have cover in place, it may be a good idea to apply for a policy. Without one, it could leave your family financially vulnerable if you were to die before the mortgage is paid off. It may mean they have to sell the home if they can no longer afford payments.

You may be moving home due to the birth of a child, which is all the more reason to have cover. Should anything happen to you, the payout can be used to support them in your absence, whether that's living costs, education or as an inheritance.

Do you legally need life insurance to get a mortgage?

It's not a legal requirement to have life insurance when taking out a mortgage. Your lender cannot force you to take out a policy, but some may recommend it as part of the mortgage process.

Even if your mortgage lender doesn’t require cover, it’s worth thinking about the risks of going without it. If you were to die unexpectedly, your family could be left with mortgage payments they may struggle to afford. Having a policy in place can give peace of mind that your loved ones would not be forced to sell the home to meet repayments.

What if you're renting?

While life insurance is often associated with mortgages, renters can also benefit from having cover in place. Renting a home still comes with financial responsibilities, and if you have dependents or share your household costs with a partner, life insurance can help protect them if the unexpected happens.

If you were to pass away, your loved ones might struggle to keep up with rent payments or other bills without your income. A life insurance payout could help them stay in the home while they adjust, or give them financial breathing room to find a new place.

Even if you're renting alone, life insurance can still be useful. For example, it could help cover funeral costs or leave a financial gift to family members. If you're planning to rent long-term, or you're in a shared tenancy, it's worth considering how your absence could affect those around you.

Income protection and critical illness cover are also valuable options for renters. These policies can help you maintain rent payments if you're unable to work due to illness or injury, offering peace of mind that your home remains secure.

Types of life insurance to consider when moving house

There are a number of life policies that can be used to cover rent or mortgage payments. They can also be used to cover other costs that your loved ones may need support with during your absence.

Decreasing term life insurance

One of the main policies is decreasing term life insurance, also known as mortgage life insurance. This type of cover is commonly used to cover a repayment mortgage.

As a type of term life insurance, the policy lasts for a certain number of years (typically between 5-50). The payout amount and length are tailored to match the size and length of your mortgage. This amount decreases as you pay off your mortgage over time, whilst your premiums remain fixed.

Level term life insurance

Just as with decreasing term cover, level term life insurance lasts for a set number of years. During the policy, both the payout amount and cost of your monthly premiums remained fixed. Even as you get older, these amounts will stay the same.

You don't need to use it primarily to cover a mortgage, it can be used to cover other costs, such as living expenses, debts, and even funeral costs. It also tends to be cheaper than other types of cover, as the policy can expire.

Whole of life insurance

Whole of life insurance offers permanent protection, meaning it covers you for your entire lifetime, as long as you continue to pay the premiums.

This type of policy guarantees a payout to your beneficiaries whenever you pass away, a reliable option for those who want their loved ones to receive support for the future.

You may opt for whole-of-life cover if you wish to have cover even after your mortgage has been paid off. The payout can be used to cover your loved ones' living expenses or provide an inheritance for your children or grandchildren.

Because cover is permanent, premiums tend to be more expensive, though you don't have to worry about the policy expiring. The premiums for this kind of policy are also usually fixed unless you add indexation to help ensure the sum assured keeps up with inflation.

Joint life insurance

Many couples tend to take out a joint mortgage when buying a home, in which both are responsible for repaying the loan. For such couples, joint life insurance can be an ideal solution. This policy type covers two people under one policy.

The policy pays out only once, either on the first death or the second death, depending on the terms of the policy. In either case, it can leave the surviving policyholder protected. It could also be cheaper than having separate policies.

Income protection

Moving home often means taking on higher financial commitments, such as a larger mortgage or rent. Income protection provides a monthly benefit if you can’t work due to illness or injury.

This can be invaluable for covering household bills and keeping up with mortgage or rent payments if you lose your income for an extended period.

Critical illness cover

Critical illness cover pays out a lump sum if you’re diagnosed with a serious illness, such as cancer, heart attack, or stroke. While it’s not life cover, it can be added to or taken alongside a policy. This cover can help you and your family manage mortgage payments, household costs, or expenses if you’re unable to work due to illness or injury.

What if you already have life insurance?

You should always review your policy whenever you experience significant life changes, like moving house. While your current life insurance policy may have suited your needs before, a new mortgage or rent could mean you need increased cover.

The same applies to any other life changes you go through, such as getting married, changing jobs or having children. For more information please see: When should I review my life insurance cover?

Get mortgage cover through Cavendish Online

Looking to protect your new home? You can get an instant online life insurance quote with Cavendish Online and see how much cover might cost in just a few minutes.

If you’d prefer to talk things through, our specialist advisers are here to help. They can guide you through your options, answer any questions, and find the right policy for your circumstances.

Whether you want peace of mind for your mortgage or broader family protection, we’ll make sure you get the cover you need.