Buying your first home is one of life’s most notable milestones, but in all the excitement of viewing properties, making offers and walking through your own front door for the first time, you could be forgiven for overlooking the importance of life insurance.
In this guide comprehensive 2025 guide, we’ll explore what life insurance means if you’re a first-time buyer.
Do you need life insurance to buy a house?
Legally, you don’t have to take out life insurance as a first-time buyer, but it’s commonly seen as a very good idea. If you’re covered by a life insurance policy and you pass away, your family could receive a large cash sum to help pay off the mortgage and provide some financial security and peace of mind.
Below we list some questions to ask yourself if you’re considering whether you need life insurance as a first-time buyer:
- Without a life insurance policy, could your family make the mortgage repayments if you were no longer around?
- Does your employment offer you any financial protection, such as a death in service benefit?
- If you were to pass away, would your partner or family members need to change their work arrangements? For example, if you have children, would your partner have to pay for additional childcare so they could continue to manage their work commitments?
A good way to view life insurance is as a safety net for the ones you love if the worst were to happen to you. While it is not a legal requirement, it’s important to consider life insurance when buying your first property because it provides protection to the people closest to you.
As a first-time buyer, what’s the right type of life insurance?
The right life insurance for you will vary depending on how much financial cover you’d like, and what you’re able or willing to spend.
Below we a give brief overview of the two most common types of life insurance for first-time buyers.
Decreasing Life Insurance: Also known as ‘mortgage life insurance’, this type of policy is designed to protect a repayment mortgage.
The amount you pay in cover will reduce roughly in line with the way your repayment mortgage decreases over time, meaning this type of policy is intended to be used to help pay off the mortgage, rather than fund things like childcare, bills or other utility costs.
Life Insurance: A standard life insurance policy will provide a cash lump sum that could be used to help fund a wide range of additional expenses, such as your mortgage, bills, education costs and any other type of recreational activities. This cover lasts for the duration of the policy term that you agree to when you arrange the policy.
What’s the difference between life insurance and home insurance?
A common mistake for first-time buyers is to confuse home insurance and life insurance. Although both are forms of financial protection, life insurance is about protecting people, while home insurance allows you to financially protect your property, its contents, or both. Depending on the options you choose to protect your property, home insurance could cover you for damage or loss caused by events such as theft, fire, flood or accidental damage.
What happens to my mortgage if I die?
If you’re a first-time buyer and you pass away as the mortgage holder, there are numerous possibilities in terms of what happens with your mortgage.
In the instance that you’re the sole owner, the ‘executor’ of your Will should pay off your remaining debts. This might include selling the property or making a claim through your life insurance policy – if you have one.
If you purchased the property with your spouse or co-habiting partner as joint owners, they will be responsible for paying off the entire mortgage or they could make a life insurance claim if applicable.
If there is an outstanding mortgage balance but no life insurance in place, the ‘executor’ of your Will should ask the creditors to pay off the debts or arrange for someone to keep paying the remaining mortgage. Failing that, the property could be sold to cover the debt.
If there is no Will, the rules of Intestacy will apply, meaning your estate, including any property, will be sold and distributed according to a legal default.
How to arrange life insurance
If you’re a first-time buyer and you’d like to speak to an expert about life insurance, please fill out our contact form to arrange a call with one of our advisors. They can help you to identify the right type of policy for you and answer any questions you might have.
Alternatively, get started right away by calling 01489 532 399.
Initial calls are consultation only and can be arranged to fit around your schedule.
Don’t leave safeguarding your loved ones to chance, why not call us today?
