Mortgage Protection Insurance
Bereavement is an extremely difficult time. The surviving dependents are, of course, extremely upset and shocked, and life is hard to cope with. If the deceased was an income earner, financial difficulties will add to the burden of those left behind. Life insurance will help through these troubled times.
Mortgage Protection is a decreasing term life insurance policy which is designed specially to pay off a mortgage on the event of death. It covers the whole of your mortgage amount, and means that the loan is paid off straight away if you die. It also means that your dependents will not be at risk of losing their home or be loaded with the additional expense and worry of paying the mortgage.
Most mortgage lenders require you to take out Mortgage Protection as a condition of lending you the mortgage.
The Mortgage Protection policy must have the same term as your mortgage, and you must make sure that it will cover all rises in inflation.
For more information, and a free quote, visit Best UK Life Insurance.
There are two ways to protect your mortgage, outlined below.
Mortgage Protection with or without Critical Illness Insurance
This will pay off your mortgage in the event of death or a critical illness which means you are unable to work.
If you choose to take Critical Illness Cover as well as Life Insurance Mortgage Protection, your premiums will, of course, be higher than if you take Life Assurance alone. You need to weigh up the additional costs against the benefits gained.
You can choose between:
- Level Term Insurance where the sum assured stays the same during the course of the policy, in order to pay off an interest-only mortgage.
- Decreasing Term Insurance where the sum paid out on death or illness decreases each year in line with a reducing loan such as a capital and repayment mortgage. This option is less expensive than the Level Term one.
In the case of a mortgage in joint names, the insurance should also be taken out in joint names, and the mortgage would be paid off on the death of the first partner. This is a reassuring thought, as it means that you do not have to worry about paying the mortgage at what is, of course, an extremely difficult time of life.
If you have an interest only mortgage you would need level term insurance, here the death benefit remains the same throughout the term of the mortgage.
Mortgage protection in the event of accident, sickness or redundancy
This insurance policy will pay out on the event of your dishabilitating accident or illness, or on redundancy or loss of self-employed income. It will pay a monthly amount to cover your mortgage and possibly other bills too.
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