If you have dependents, whether that’s a spouse, partner and or children, the consequences of death without having life cover in place to protect the repayment of a mortgage can be catastrophic.
Let’s just imagine the scenario for a moment of what might be a typical family.
David and Claire have two children, Tom is 7 years old and Rebecca who’s 4. David is the main earner and Claire works part time. They have lived in the same house for 5 years and have 20 years remaining on the mortgage.
If David died tomorrow what would happen if he did not have sufficient life cover to repay the mortgage?
Clearly the mortgage might not be at the forefront of Claire’s mind initially, as firstly she and the children would have to come to terms with the loss of a husband and father. However, at such a devastating time the death of her husband would not be the only thing that Claire would need to deal with.
She would have to consider the families financial position very quickly. The mortgage would still need to be paid and with the loss of the main earner this would obviously make things very difficult. Claire would be faced with some choices, choices that she’d probably prefer not to consider.
- She may have to work full time. But would the level of income support the mortgage and the cost of running the home, as well as potential child care costs? How long would it take to find a suitable job? If one was found wouldn’t this mean spending less time with the children? Probably not ideal when they would certainly need the support of Claire, more than ever.
- Worse still she may have to consider selling the family home. This is the place where memories of David are precious for her and the children. Selling the family home may mean the children would be leaving somewhere they might consider safe. They may also need to move to a different school. What if it’s not the best time to sell the property? Even if the property is saleable, the selling price might need to be lower to assist with a quicker sale. What about a future property, will it be possible for Claire to borrow enough money with a mortgage that still remains affordable?
- Finally what about meeting the day to day living costs: food, gas, electricity, water, clothing, the cost of running a car and even the longer term implications like holidays and possibly funding for the children’s future education.
The financial devastation is not necessary. Life cover is extremely inexpensive with £16.06 per month providing £200,000 of level life cover over 20 years, for a 40 year old non smoking male. So although you might not want to think about death, think about the consequences and lack of choice you’d leave behind, if something did happen.