This insurance myth could be costing you £100s a year – have you been caught out?

Two-thirds of homebuyers have been misled

How many times have you got one of the annoying calls asking if you’ve been mis-sold something? But before you hang up this time, if you’re a homeowner you actually might have been mis-sold this very expensive utility.

Related: Martin Lewis top tip that could save you over £1000 on your home insurance

According to comparison site ActiveQuote.com, many homebuyers are being mis-sold life insurance under false pretences.

Have you been mis-sold life insurance with your mortgage?

The study found that 60 per cent of people have been told they need to have life insurance in place before buying a house. While 30 per cent were told they could ONLY get a loan if the cover was in place.

mis-sold life insurance 2

Image credit: Ti-media

If you have recently brought a house, some of this might be ringing bells. You might even be one of the 30 per cent who were actually told it was a legal requirement.

Or part of the 51 per cent who told they also needed income protection cover in place before the sale. None of this is true.

Unfortunately, buying into this myth perpetuated by some mortgage providers could have been costing you hundreds of pounds a year.

mis-sold life insurance 1

Image credit: Ti Media

Income protection and life insurance are good things to have when buying a home. However, there are no rules saying you need them as a first-time buyer.

These insurances will cover you if someone dies or loses a job. But they can be big expenses so be certain that you need them before you buy.

Also, be sure to shop around before settling on a provider. 8 per cent of people didn’t realise they didn’t need to purchase life insurance from their mortgage provider. So don’t fall into the trap of settling for a more expensive deal.

What insurance do I need for a mortgage?

mis-sold life insurance 3

Image credit: David Brittain

There is insurance that you do need if you are buying a house – building insurance. This will cover any damage to the bricks and mortar of your home. It should be sufficient to cover the price of the rebuilding the house if required.

This cover needs to be in place as soon as contracts are due to be exchanged, and will often be listed as a condition of getting a mortgage. Your conveyancer will usually ask for proof of this before letting the sale go ahead.

Related: The Moneywise Mortgage Awards 2019 reveal the best mortgage deals in every category

Have you been mis-sold life insurance?

All the latest from Ideal Home