Mortgage life insurance is somewhat self-explanatory in that it is an insurance to help cover your mortgage should you pass away.
Without mortgage life insurance, you could be putting your loved ones at financial risk. That’s why tackling the issue of the inevitable is something you should do sooner, rather than later.
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If you have a mortgage it is important to consider anyone whose financial circumstances and well-being will affected by your death because they are financially reliant on you. It is therefore important to plan accordingly and ensure you have considered you dependents.
If you die unexpectedly, those who you leave behind will suffer enough from such a loss, and you can take steps now to make sure they do not suffer from financial stresses too.
A Decreasing Term policy sees the payout sum reduce alongside the length and total mortgage debt. So, for instance, if you passed away in year one of a £200,000 mortgage, you’d inherit £200,000. Whereas, if you died halfway through your mortgage term, you’d only get £100,000. Therefore, this sort of policy usually has lower monthly premiums and obviously suits those with repayment mortgages.
Level term mortgage life insurance means that the payout sum stays fixed or ‘level’ throughout your mortgage term regardless of when you die. So, even if you die within the first or last year of your term, if your policy is £200,000, that’s what your dependants will receive. An obvious benefit to this is that they may receive more funds than the remainder of the mortgage, leaving additional funds to cover bills, living costs or to offset what your salary brought into the household. However, the result of this is higher monthly premiums.
Whole of Life Insurance is a policy which ensures a tax-free lump sum is paid out in the event of your death. The premiums are usually higher because a payout is inevitable. You don’t just pay monthly premiums for a term, you pay until your eventual death, meaning that you could be paying into your 80s or 90s. However, it whole of life insurance guarantees a fixed amount of cover because of the fixed premiums.
Whether your home is a one bedroomed flat or a 10-bedroomed mansion, your home is your castle. That’s why it’s important to get the right cover in place should something go wrong. Our dedicated team of mortgage brokers have the expertise and knowledge to understand individual circumstances and find you the right mortgage life insurance deal.
You will no doubt be advised to take out some sort of life insurance, when you first acquire a mortgage. It’s suggested that the sooner you take out a policy, the cheaper it will be, in terms of monthly premium. Then again, that is dependent on factors such as age and health. Insurers consider you less likely to make a claim the younger and healthier you are. It is also dependent on your situation in terms of immediate family, as you may not feel insurance is a viable option.
Life insurance will only pay out should you die. Therefore, other injuries or illnesses are not covered. For that you will need to look at critical illness insurance. Also, if you die to alcohol or drug related incidents, you are likely not to receive payment. The same applies if you have existing health policies when you take out the policy.
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