Do new build buyers need life insurance?
Yes — if you're taking out a mortgage on a new build, life insurance is strongly recommended (and sometimes required by your lender). It ensures that if you die before the mortgage is repaid, your family isn't left with a debt they can't afford.
When to arrange life insurance on a new build
New builds can take months to complete after exchange of contracts. You should arrange your life insurance to start:
- At exchange of contracts (not completion) if the policy is linked to your mortgage — to cover the period between exchange and completion
- Before completion at the latest, to ensure cover is in place as soon as you take on the mortgage
How much life insurance do I need for a new build?
At a minimum, the sum assured should equal your mortgage amount. A level term policy provides consistent cover throughout the mortgage term. Consider additional cover for income replacement beyond just clearing the mortgage.
Help to Buy and shared ownership
If you're using Help to Buy or buying on a shared ownership basis, your mortgage amount may change over time (as you staircase to full ownership). Review your life insurance cover whenever your mortgage balance changes significantly.
Frequently Asked Questions
A standard life insurance policy pays out on death regardless of whether completion has happened. If you die after exchange but before completion, the policy proceeds can be used to complete the purchase or settle the legal obligation.