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Why take out Mortgage Protection?
Mortgages
Mortgage Protection is an inexpensive type of term assurance that is specifically designed to repay the outstanding balance of a mortgage, should one of the policy holders die during the mortgage term. This means that if you were to die during the term of your mortgage, the outstanding balance would be repaid in full leaving your family mortgage free.
Mortgage protection, in most situations would be the cheapest way of protecting your family against the outstanding debt and the adverse consequences debt holds.
There are two types of Mortgage Protection:
- Level term assurance; this will be used to insure the balance of an interest only mortgage. The balance of an interest only mortgage will remain unchanged during the term of the mortgage and so the amount of cover will not reduce and stay on par with the outstanding debt. Example: £200,000 life cover for a term of 25 years. The £200,000 will remain unchanged for the full 25 years.
- Decreasing term assurance; In the case of a capital and repayment mortgage, the outstanding balance of the mortgage will reduce over time as repayments are made. This means that as time elapses less life cover is required to repay the outstanding balance. The cover provided by the decreasing term assurance policy will thus reduce roughly in line with the balance of your mortgage. The main reason why decreasing term assurance policies are popular is because of the significant cost savings achieved through the diminished risk that need to be covered due to the falling insured balance.
For a quick mortgage protection quote or more information, please contact one of our qualified advisors on 08456711100 or submit a query.
Mortgage protection can expanded with a number of added features called rider benefits. Some common examples of these include:
- Critical Illness Cover: This allows the benefit or cover amount to be paid out early in the event of you contracting a serious illness (e.g. Cancer, stroke, heart attack and a list of predetermined other illnesses) prior to death. In most cases should an event like this happen to you, you would probably want to focus on recovering and critical illness protection will ensure that your mortgage is repaid. Critical Illness cover can either replace the death benefit, or be paid out in addition to it. There is an additional cost to adding Critical Illness Cover.
- Waiver of Premium Benefit: This allows for the monthly premiums of the policy to be paid for you by the insurers in the event of you contracting an incapacitating illness and being unable to work. There is an additional cost to adding Waiver of premium benefit.
- Income Protection Benefit: This allows for between 50% and 66% of your pre tax income to be paid to you if you are unable to work at your usual employment. The benefit will become payable after a predetermined amount of time, called the deferred period. The deferred period can range in steps from immediate(more expensive) to a maximum of one year(less expensive).
Income protection benefit will be paid out for a predetermined period, called benefit period. The benefit period can be for a number of years; example for 5 years or to a specific age e.g. 55. There is an additional cost to adding income protection benefit.
For a no obligation independent mortgage protection quote or more information, please contact one of our qualified advisors on 08456711100 or submit a query. We also provide a full financial planning service that will evaluate your total financial and protection position. If you would want to discuss your position with one of our planners, please click on the query buttonabove.