Somewhere between agreeing on your mortgage and exchanging contracts, your broker will hand you a list of insurance products. Buildings, life, income protection, critical illness, contents. The total monthly cost can feel surprisingly high, especially when you’re already stretching for a deposit and legal fees.
So what’s genuinely required, what’s worth considering, and what’s being sold to you because your broker earns commission on it?
Building Insurance is the only one your lender requires
Buildings insurance. That’s it.
Your mortgage lender needs to know that the property’s structure is covered - walls, roof, foundations, pipes, and electrics. If something catastrophic happens, they want their security protected. You’ll typically need this in place by exchange of contracts.
The cost varies by property type, location, and rebuild value. One thing worth noting: the sum insured should reflect the rebuild cost, not the purchase price. These are different numbers, and rebuild cost is usually lower.
Everything else on your broker’s list is optional. That doesn’t mean it’s all worthless, but none of it is required by your lender, and the urgency your broker attaches to each product doesn’t always match your actual situation.
Life insurance is important for some, but not everyone
Life insurance pays out a lump sum (or clears the mortgage) if you die during the term. It’s a legitimate product, and it makes clear sense if you have a partner or children who depend on your income to keep up the mortgage payments.
But think about who actually benefits from the payout. If you’re buying alone with no dependents, there’s no one left with a debt problem. The property gets sold, and the mortgage gets cleared from the proceeds. The urgency depends entirely on whether someone else is relying on you financially, not on whether you have a mortgage.
Brokers earn well on life insurance, which is why it tends to appear near the top of every recommendation. That doesn’t make it bad advice. It just means you should think about whether the product fits your circumstances rather than accepting it as standard.
Income protection is the one most people overlook
This is the product most independent financial advisors rate highest for buyers who rely on a single income, and it’s often the one brokers give the least attention to.
Income protection pays a monthly amount if you can’t work due to illness or injury. Unlike critical illness cover, it doesn’t require a specific diagnosis from a specific list. You just need to be unable to do your job. It continues paying until you recover, reach retirement, or the policy ends.
Before buying, check what your employer already provides. Many offer several months of full sick pay. If that’s the case, you can set a longer deferred period on your policy, and the premium drops significantly. You’re covering the gap your employer doesn’t, rather than duplicating what they already do.
Critical illness is expensive and narrower than you’d expect
Critical illness cover pays a one-off lump sum if you’re diagnosed with a condition on the insurer’s list, typically cancer, heart attack, stroke, and a few dozen others. The idea is you use it to clear the mortgage outright after a serious diagnosis.
The issue is cost relative to coverage. It tends to be the most expensive protection product, and the qualifying conditions are narrower than most people expect when they sign up. Not every cancer diagnosis triggers a payout. Not every heart condition counts.
If you already have income protection, there’s a significant overlap. Most independent advisors suggest choosing one or the other if the budget is tight, and income protection tends to be more flexible.
Contents insurance - sort it when you move
Contents insurance covers your belongings: furniture, electronics, clothes, and valuables. Your lender doesn’t require it, and it’s not urgent for exchange or completion. Sort it when you actually move in. It’s straightforward to arrange independently and doesn’t need to go through your broker.
Why the total feels high
When a broker bundles every available protection product together at full cover, the monthly cost can look alarming, particularly for someone already absorbing the costs of buying a home. That doesn’t mean each product is overpriced individually. It means you’re being shown the maximum version of everything at once, without much consideration for what you actually need right now versus what you might need later.
A few things worth doing before committing:
- Check what your employer already provides. Death-in-service cover, sick pay, and group income protection all reduce what you need to buy privately.
- Compare quotes independently rather than buying everything through your broker. The convenience of one-stop-shop advice comes at a cost.
- Think about your circumstances as they are now, not as your broker imagines them. You can always add or adjust cover later as your situation changes.
The question worth asking your broker
If your broker is recommending multiple products, ask them: “Which one would you drop if I could only afford one or two?” Their answer, and how long they take to give it, tells you a lot about whether they’re advising or selling.
Disclaimer: This article is for general information only and does not constitute financial advice. If you’re unsure which products are right for you, speak to an independent financial advisor.