Would your loved ones find it difficult to keep up with mortgage repayments if you were to pass away unexpectedly? In worst-case scenarios your family could be forced to sell the family home. Having adequate life insurance cover in place provides an important buffer against such an eventuality.
Key features and benefits
Mortgage protection life insurance, also known as decreasing life cover, can help pay off a capital repayment mortgage if the policy holder were to pass away unexpectedly. The amount of protection cover decreases as the mortgage is paid off, so typically the term length reflects the mortgage term. This type of cover is not suitable for interest-only mortgages.
Premiums for decreasing life insurance are typically cheaper in comparison to a life cover amount that stays the same. Although the protected sum changes, premiums are normally level or consistent over the term. It can be attached to a critical illness policy, so you are protected against serious illness too, although this will increase the premiums.
Products can be set up on a ‘joint life’ basis for couples, with the policy generally paying out upon the first death. The full mortgage does not have to be protected – for example, the policy could cover half of the outstanding value.
Possible limitations
Mortgage protection life insurance does not cover income shortfalls due to a job loss, or the inability to work because of illness or accident. Separate insurance products can provide this cover. As is typical with insurance products, premiums are affected by factors such as your age, lifestyle, and health. A GP report may be required in underwriting.
Mortgage protection life insurance can provide peace of mind and be a valuable safety net for families. There are a large number of products available on the market, so it’s important to choose the coverage that best matches your needs. Find out more by calling 03300 564 446, or get in touch using our contact form.
This article is for general information purposes only and does not constitute financial advice or a personal recommendation. Tax treatment depends on individual circumstances and may change in the future. Your home or property may be repossessed if you do not keep up repayments on your mortgage.
