Mortgage Protection Insurance
Mortgage repayments are one of the largest monthly financial outgoings for most people. Without protecting it, you may run the risk of losing your home if you were unable to make the repayments.
Mortgage protection is insurance that covers your mortgage if something unexpected happens. If you become terminally ill, or pass away, both the repayments and the interest would be paid off. Mortgage lenders require this cover before they release the mortgage funds to your solicitor.
What is mortgage protection insurance?
Mortgage protection insurance is a type of life insurance. It pays off the rest of your mortgage if you become terminally ill or pass away within the policy term. This means your family would be able keep their home and have one less thing to worry about.
It’s also called mortgage protection life insurance, decreasing term life insurance, or decreasing life cover. They’re all the same thing.
Is mortgage protection the same as life insurance?
Mortgage protection insurance is a type of life insurance.
The key difference between the two comes down to the reasons you are taking out the cover.
For example, some may want to protect their family’s finances if they die, and that’s their priority. Others may want to make sure their family can keep their home if something bad were to happen.
Is mortgage protection the same as life insurance?
Once you have taken out the policy:
• You pay fixed premiums for a fixed period of time, usually the same period as the mortgage.
• As you pay off your mortgage, the amount of insurance cover you need decreases in line with it.
• If you become terminally ill or die during the policy term, your mortgage lender will receive a lump sum. This money will be used to pay off your mortgage.
How does mortgage protection insurance work?
Once you have taken out the policy:
• You pay fixed premiums for a fixed period of time, usually the same period as the mortgage.
• As you pay off your mortgage, the amount of insurance cover you need decreases in line with it.
• If you become terminally ill or die during the policy term, your mortgage lender will receive a lump sum. This money will be used to pay off your mortgage.
What does mortgage protection insurance cost?
The cost of your mortgage protection plan will depend on things like:
• Your age
• Your height
• Your weight
• Any pre-existing health conditions you may have
• If you smoke
• If you’re employed in a high-risk occupation e.g firefighter
• How much cover you need to take out to cover your mortgage.
• The length of time the cover needs to be in place to cover your mortgage
Insurance companies may ask for other details depending on the amount and type of cover you require.
Mortgage life versus serious illness cover
Serious or critical illness cover as it’s sometimes known as, pays out a cash lump sum to you and your family if you become seriously ill. It usually covers illnesses like heart attacks, strokes and cancers.
Mortgage protection insurance pays out a lump sum if you pass away.
It’s possible to combine Mortgage Protection Insurance with Serious Illness Cover according to your requirements.
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