Death benefit insurance usually not required: why buy it anyway?

When taking out a mortgage, you go through several possible scenarios beforehand. What if you or your partner dies unexpectedly. Will the other person still be able to pay the mortgage? To cover this risk, you can take out death risk insurance. The insurer will then pay out money if you or your partner dies. You can use this money to pay off the mortgage, so that your future mortgage payments will be lower. The purpose of term life insurance is that the surviving partner can continue to pay the expenses, even if the income of the deceased partner is lost.

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Not mandatory, still wise

Do you have a mortgage with National Mortgage Guarantee (NHG)? If so, since 2018 you are no longer obliged to take out death risk insurance. But even for mortgages without NHG, most mortgage lenders no longer require you to take out death risk insurance. Some banks still require you to take out one if you want to borrow more than 80% of the home value.

So while term life insurance is not mandatory, it is still wise to consider it. If you live with your partner and one of them dies, is the income or savings sufficient for the surviving partner to continue living in the home? If there are (young) children, the surviving parent may have to work less or use child care. This can have major financial consequences. Death benefit insurance ensures that at least you don't have any financial worries during a sad time.

Cohabitation

The way in which you live together also plays a role in death benefit insurance. If you live together without a cohabitation contract, your rights are often not the same as if you were married or in a registered partnership. This matters for the insurance payout, which is why this must be adjusted in the terms and conditions. This can be complicated, which is why it is good to have someone with the necessary expertise look over your affairs with you, so that you can be sure that everything will be properly arranged.

Would you like more information about death benefit insurance? Then be sure to contact us!