What insurance do you need with a mortgage?

You don’t need to take out life insurance to get a mortgage but if you have family who depend on you financially, it’s worth considering. It can give you peace of mind, knowing your loved ones will be taken care of if you die. This means your family won't be left with the responsibility of paying off your mortgage or risk having to sell up and move.  

The amount of life insurance you’ll need will depend on the size, and type, of mortgage you have. It’s important to factor in other debts too, as well as money needed to care for dependants, such as a partner, children, or elderly relatives. 

Explore: Do you need life insurance?

Critical illness insurance can help you deal with financial pressures that come as a result of a serious critical illness, such as a stroke, heart attack or cancer. It’s not essential to have this type of cover when you take out a mortgage but it’s worth considering.

It’s typically offered as a lump sum payment on diagnosis of a specified illness. This money can offer some reassurance during a difficult time and be used to clear your mortgage, pay bills, or help with rehabilitation costs. 

Explore: What is critical illness insurance?

Income protection pays a monthly benefit to help cover your loss of earnings if you can’t work because of an accident or injury. You don’t need it to get a mortgage, but it can provide a safety net in case something were to happen. 

For example, it could help you keep on top on your mortgage repayments, so you can focus on your recovery without having to worry about money. 

Some employers offer income protection as an employee benefit, but not all do. It could also be limited, so it’s worth checking the details. If you’re self-employed or a freelancer, income protection may be even more important.

Buildings insurance protects you against the cost of repairing or rebuilding your home from scratch – if it ever got damaged by a fire or flood, for example. It’s important to get enough cover, especially if you have a home to protect and a mortgage to pay.

Buildings insurance typically covers: 

• the structure of the building
• permanent fixtures and fittings, such as kitchens
• outside buildings, such as garages and sheds

Leasehold properties will still need buildings insurance, but the responsibility usually lies with the person who owns the freehold. However, it’s worth checking with your solicitor as this isn’t always the case and you may need to insure it yourself.

Please note – HSBC Channel Islands & Isle of Man doesn’t offer buildings insurance.

It’s not essential but you may want to protect your belongings too, with contents insurance. From your TV to your dishwasher and garden equipment, you shouldn’t underestimate how much your items are worth. If you ever needed to replace them, you’d need enough contents insurance to cover your losses.

Please note – HSBC Channel Islands & Isle of Man doesn’t offer contents insurance.

All insurance policies are different – it’s important to regularly check what is and isn’t included, so you’re covered for the things you need.