Monday, April 14, 2008

Step 15 : Insurance

Before your bank or building society will issue your cheque you will need to get two forms of insurance sorted out.

The first is life insurance,and the second is home insurance.

For the life assurance you have two main options: term insurance or life insurance. Term insurance gives you more cover, but costs slightly more. What it is is insurance of a fixed amount for a fixed length of time (usually the term length of your mortgage). If (God forbid!) you should die before the length of the mortgage the entire amount covered is paid out. So, for example if you have a 500k mortgage and take out term insurance, but over the years you'd paid back 90% and then die, whoever you leave your estate to will get 90% back as the full 500k will be paid out (so 10% to pay rest of mortgage, and 450k left over). Term insurance costs a little more, but as you can see it pays a lot more later on too.

Home insurance is very important, as your mortgage provider will not issue your cheque without it.

One VERY IMPORTANT bit of advice is to get the home insurance to be started a few days before you close the sale. We were caught with that. Our close date was a Friday and we got our insurance to start on the Friday. But on the Tuesday when our solicitor asked the bank to issue the cheque they said no, as we didn't have insurance in place. So, we had to get it moved forward to start a couple of days earlier. Not a big deal, but it was a major stress at a time when we were highly strung already.

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