Mortgage Life Insurance
Mortgage Protection is also known as Decreasing Life Insurance
There are two main types of mortgage:
- The most popular is the repayment mortgage. This will need a decreasing term assurance policy (see below).
- An interest only mortgage will require a level term assurance policy.
Mortgage Protection Cover
Decreasing Term Assurance Product Features:
- Fixed term of years selected to match your mortgage.
- Sum assured reduces to reflect the outstanding mortgage loan amount each year.
- Sum assured is paid out on death during the policy term.
- No money is paid out if you survive.
- No surrender value.
- The premiums stay the same throughout the term of the policy.
Decreasing Term Assurance Policy Benefits :
- Low cost protection cover used in conjunction with a repayment mortgage.
- Cover can be purchased with or without critical illness cover.
- Normally includes terminal illness benefit as part of the standard policy.
- Accepted by most major lenders as suitable cover for your mortgage.
- Ideal for repayment mortgages or loans.
- Premiums guaranteed not to increase from acceptance for the policy term.
Decreasing Term Policy Limitations:
- You may want to extend the term, but this is not possible.
- You may be in ill health at the end of the plan and be unable to obtain further cover.
- The reducing sum assured will not take account of inflation.
- If you increase your mortgage you will need a new policy to cover the extra borrowing.