If you have a mortgage it’s normally your biggest debt. Mortgage life insurance aims to pay off your mortgage if you die during the plan term. The amount of cover reduces each year roughly in line with your mortgage.
If you have an interest only mortgage and the debt is not reducing level term insurance might be more appropriate as the death benefit does not reduce.
Is mortgage life insurance directly linked to my mortgage?
No it isn’t. The purpose of this policy is to cover the balance remaining on a re-payment mortgage. Any money paid from a policy would not go directly to a lender, instead the claim would form part of the life insured’s estate where it can be used to pay off any remaining mortgage.
What happens in the event of a claim
If your mortgage life insurance is in joint names and one of the lives insured dies the sum assured will be paid out to the surviving plan holder. A claim on a single life policy will be paid into the deceased’s estate and then paid out according to the will. If there is no will, the payout will be subject to the rules of intestacy.
How much cover should I have?
You can have any amount but normally you would match the amount of cover to your mortgage. If you choose to have more cover and a claim was made you would end up with with money left over after the debt has been settled.
If you’re not sure how much cover you need speak to an independent financial adviser.
Can I include critical illness cover?
Critical illness cover can be added to the policy. The chosen sum assured would be paid in the event of certain serious illnesses being diagnosed. You would not have to die for a claim to be made.
How much will my mortgage life insurance cost?
The premium will depend on a number of factors, including how much cover you need, the term of the policy, your age and your health.
Why use Moneyworld?
For over 25 years we’ve been arranging mortgage life insurance. We can offer you cover from the leading providers at the lowest possible price.