Mortgage Protection Insurance
Mortgage Protection Insurance – Things to Know
For a lot of people, a mortgage is generally their largest outgoing. Being able to pay your mortgage is essential. But what happens if, for whatever reason, you are unable to make the payments for your mortgage? For example, if you become ill, injure yourself, or you are made redundant, or you pass away, what happens then?
If the mortgage is unable to be paid, your ownership of the property is at risk.
This is where mortgage protection insurance proves to be so useful. Here’s a look at a few key things to know about mortgage protection insurance.
What Is Mortgage Protection Insurance?
A common use of this type of Life Insurance cover is if you have a repayment mortgage.
So, the amount owing on the mortgage is likely to be falling as more is paid off over the years.
Imagine you had taken out a 25 year mortgage for £200,000. At the time you took out the mortgage, you could have needed £180,000 worth of Life cover to pay off the mortgage, (depending on deposit).
However, if you were to die within that 25 year period, how would your loved ones continue to meet the repayments?.
Indeed, most mortgage providers will require proof that you have suitable Life Cover in place before releasing the funds.
Very often, the mortgage provider will suggest their own Mortgage Protection package but it’s well worth filling in our 30 second form to challenge us to beat their premiums!
So, after say 10 years of repayments, the mortgage amount owing is likely to have shrunk, so you could find that you don’t need quite as much Life Cover and you could be paying more than is necessary in premiums as a result.
There are other circumstances where you could benefit from Decreasing Term Life Insurance. Maybe you want to provide for you family while your children are very young but you might not need so much cover as they get older.
This type of insurance differs from Level Term Life Insurance and Increasing Term Life Insurance.
Why Choose A Policy That Pays Less As Time Goes By?
We are all well aware that nothing in life is getting cheaper, and the costs of living are a perfect example of that. So then, you’d be forgiven for wondering why people would choose to pay the same amount of money each month for a policy which pays less with the passing of each year.
Well, primarily, most people use this type of insurance to suit the needs of their families. It also depends on the estimated living costs for the future. Everyone’s life is different and consequently everyone’s needs are different.
Primarily, though, the main reason why people choose these policies is usually because they cost considerably less than many other forms of life insurance available.
Different Ways That Mortgage Protection Insurance Can Be Suitable?
As benecial as this type of insurance policy can be, it isn’t necessarily right for every circumstance. However, it can be ideal for circumstances where, perhaps, you may not have considered it before.
This therefore works very well for debts that decrease as time passes by, such as capital and interest repayment mortgages.
There is an increasing use of this type of insurance for the Bank of Mum & Dad, where they lend their children enough money for a deposit to allow them to get on the property ladder.