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, 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.

two story red brick and white wall house with white window and red roofing

(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.

bedroom with white wall metal bed white windows and wooden floor

(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?

living room with grey shelves sofa set with cushion and round table

(Image credit: Future PLC/ 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?

Rebecca Knight
Deputy Editor, Digital

Rebecca Knight has been the Deputy Editor on the Ideal Home Website since 2022. She graduated with a Masters degree in magazine journalism from City, University of London in 2018, before starting her journalism career as a staff writer on women's weekly magazines. She fell into the world of homes and interiors after joining the Ideal Home website team in 2019 as a Digital Writer. In 2020 she moved into position of Homes News Editor working across Homes & Gardens, LivingEtc, Real Homes, Gardeningetc and Ideal Home covering everything from the latest viral cleaning hack to the next big interior trend.