The recent furore over PPI for bank loans may make people suspicious of taking out insurance for a specific financial loan. For example, recently banks were found guilty of misselling loan insurance PPI. (misselling of PPI link) Also The profit margin was also extremely high, making it a very poor deal for consumers.
A mortgage is different in that the mortgage payments will be a much higher % of your monthly income. Furthermore, if you can’t pay your mortgage your home is at risk of repossession. Also, even one missed payment can leave you with a poor credit history and you will find it difficult to get a remortgage in the future. For this reason, it is highly advisable to get some kind of insurance to protect against loss of income and which would make it difficult to pay your mortgage. MPPI (Mortgage Payment Protection Insurance) is not compulsory (like home insurance) But it is highly advisable.
Alternatively you may get some form of short term income protection or critical illness protection. I took out a income protection policy with Standard Life and I pay about £20 a month, this will insure me for upto 50% of my income (enough to pay the mortgage)
Another way of looking at the issue is what would you do if you were made unemployed, or long term sick? Rather than relying on your savings, it is definitely worth considering some form of mortgage insurance
More on different ways to insure your mortgage repayments
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