Mortgage Life Insurance
Mortgage Life Insurance is a cheap life insurance policy. This form of cover, (also known as Mortgage Protection) is designed to pay off your mortgage if you die within the term of the policy.
Mortgage Life insurance is a decreasing term assurance. This means that the amount of cover steadily reduces over the term of the policy. At the end there is no value to the contract. It is the cheapest form of cover compared to level terms assurance or Critical Illness Insurance.
Level Term Insurance covers you form a specified level of cover over a fixed term. The amount of insurance cover does not reduce over the term.
Critical illness Insurance will payout if you are diagnosed with a serious illness. Illnesses are covered under the policy definitions of the insurance company. Critical illness cover tends to be more expensive than level term assurance or mortgage protection. This is due to the nature of the cover. The range of illnesses covered can vary widely between insurance companies.
It is important to seek impartial and independent financial advice when you are thinking about buying any form of life assurance.
Life cover is normally put into place in conjunction with capital and repayment mortgages. With Capital and repayment mortgages, each month you repay the interest plus part of the capital to your lender such as a bank or building society. At the end of the term the mortgage should be paid off.
It is financially advisable to put into place insurances, such as life cover and building and contents cover. This may be needed when banks or financial institutions are lending you money.
With Mortgage Protection the amount of cover and the term of the policy must be the same as your mortgage. The insurance company will calculate how much the cover will reduce by each month to pay off the mortgage.
In the event of death, the Mortgage Life insurance contract should repay the amount outstanding on your mortgage.
If you live with a partner of have a family you can insure more than one person. Taking out a joint lives assured policy can cover more than one person.
In some cases it might be wise to write the policy under trust. There can be many benefits writing policies under trust from a tax planning view.Putting policies in trust requires expert knowledge. If you would like to discuss trust planning in more depth please call us.
Some mortgage life insurance contracts can also pay out if the insured is diagnosed with a terminal illness. The diagnosis will usually confirm policyholder is expected to die within 12 months of diagnosis.
Consilium Asset Management offer “Whole of market” financial advice. We can help on all forms of life assurance, including level term assurance, key-man, Critical illness and income protection.
If you would like more advice on the different types of life cover please feel free to contact us. Alternatively you can email us at the email address at the top of the page.
YOUR HOME MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON YOUR MORTGAGE.