If the above topic did not get you already depressed, then allow me to elaborate further. As I said in a previous blog – which means that you should have read all the previous blogs as well, but I do not mind you skipping – lenders of such loans will require that you take out insurances that can cover several eventualities, or rather which cover most of the common occurrences that may preclude you from repaying your loan as a good UK citizen should. To make it painfully clear, the insurances are non-negotiable components of the loan agreement, but you will most likely be allowed to try and find the most affordable provider of the insurance package the lender obliges you to purchase.
As you may already guessed – or read above – the package will most certainly include a life insurance, which would make the bank your primary beneficiary in case that you die. It is also possible that such an insurance package will also cover several debilitating and crippling injuries that will bar you from being gainfully employed, but also there might be an insurance that would cover the (temporary) loss of employment.
Most of other insurances will be pertaining to your home that you put up as collateral. It will include fire hazard, maybe also flood hazard, electricity damages, anything that can lead to the collateral losing its value should, or rather may be covered. Such packages are standardised by now and all you need to say is that you are required to take such an insurance package for mortgage purposes and the agent will know which packages do apply. Feel free to shop around for the best offer.