[teacher76]

My partner and I have just recently bought our first home and we are looking to purchase our first life insurance policy to cover the mortgage.

I am 25 years old and my partner is 23. We are buying £240,000 townhouse. We are both in good health and have secure jobs.

I am unsure as to whether we need a term life policy or a mortgage protection that decreases over time as the size of the mortgage decreases. Also do we just need to cover the mortgage or purchase more cover?

I do not want to purchase the incorrect policy so any help and advice would be very helpful.

Thanks!

[nikosmom]

If your only goal is to cover the mortgage, then a decreasing mortgage will work for that. The downside of that is that since it decreases, there is nothing left beyond covering the mortgage once it runs out.

Term gives you the most bang for your buck because you get more insurance fairly cheaply. The downside of term is that it expires after a certain number of years. Most are renewable but then you are renewing at your new attained age. Term works well because the idea is that once the policy runs out, chances are certain debts would be paid so you won't have the same needs at that point.

I would strongly suggest sitting down with a representative that will help you figure the amount of coverage you need. They can assess your needs based on your income, debts, and financial goals for your family.

So think about what you want out of life insurance: Do you only want to cover your mortgage? Do you want to replace your income for a certain number of years to assist your spouse with the transition? Do you plan to have children, if so- what are your goals for them (ie. Do you want to have enough to put them through college).

I strongly recommend setting it up as soon as possible because it gets more expensive as you get older and possibly develop health issues.