Mortgage Life Insurance

› What is mortgage life insurance?

A mortgage specific life policy is similar to standard life cover although the plan is designed specifically to protect a mortgage and thus .

The policy guarantees to pay-off you mortgage loan should the worst happen. This means that your family would be protected and able to stay in their home if you were to pass away. Cover is available whether you have a principal repayment loan or an interest only loan.

› Do I need life insurance?

Although it is not compulsory, most lenders strongly encourage you to take out life insurance to cover the loan and in some cases they may decide to raise the loan interest rate if you decide otherwise. Whether you decide to take out mortgage life assurance will naturally depend on yours and your family's financial position.

What would be the financial consequence if either you or your partner were to pass away? Would there be sufficient funds to make the mortgage repayments? If not, then life assurance could be a solid way to protect the financial future of your family.

› Level term mortgage life cover

Mortgage term life insurance is designed to cover an interest only mortgage loan. The level of cover remains fixed throughout the life of the policy. In this way the level of cover remains in-line with the amount owed on the mortgage.

This means that if the worst were to happen the mortgage could be paid off in full. For example, suppose you had a mortgage loan of £200,000, you should set the amount of cover at £200,000 and that cover would remain the same throughout the life of the policy and the loan.

As with any life plan it is possible to write a policy in joint names and you can include critical illness cover under the same policy to provide additional protection.

› Decreasing mortgage life cover

Decreasing term mortgage life insurance is a policy specifically designed to cover a repayment mortgage. The level of cover provided by the policy is designed to decline over time in line with your outstanding mortgage.

For example, suppose after 10 years the amount outstanding on your mortgage was equal to £100,000, the sum insure

r life policy would also be equal to £100,000, and that cover would continue to fall until the loan was repaid. The premiums for decreasing term mortgage life assurance are significantly less expensive than for a level term policy as the insurers risk is reduced each year.

Again, such a policy can be set up in joint names and you have the option to include additional protection in critical illness insurance covering you should you suffer a critical illness.

› Level of cover

How much you wish to cover is completely up to you. If the sole purpose of taking out life insurance is to cover your mortgage then it makes sense to set the sum insured on your policy equal to the amount outstanding on your home loan. Thus should the worst happent the cash lump sum would pay off your mortgage in full.

If you want to have a little left over for your family should you die then it is perfectly reasonable to insure yourself for an amount in excess of your outstanding home loan. On the other hand, if you and your family have substantial savings then you could use those savings to top-up the insurance payout and thus reduce the premiums slightly.

› Length of cover

With mortgage life assurance it makes sense to set the term length of the policy equal to the term length of the mortgage.

This is especially true for decreasing term life insurance as this type of policy is designed to exactly cover your loan as the amount outstanding falls over the years (the sum insured declines in-line with the amount outstanding on the loan).

› Single or joint cover

Yes, if you have a joint mortgage and would like to have a joint policy to protect your home loan simply add your partners details to the quote form below.

A joint life plan will payout the full loan amount on first death only. The insurer will payout the sum insured directly to the surviving policyholder which means there is no need to write the policy into trust for inheritance tax purposes. It is important to recognise that should you have a joint plan and the policy pays out the plan terminates leavign the surviving policyholder with no cover.

Joint policies are available for both decreasing and level term mortgage life cover and it is also possible to add critical illness cover to a joint life plan.

› Option to include critical illness cover

Critical illness insurance will payout a tax-free lump sum on the diagnosis of a range of specified critical illnesses.

It is possible to set the sum insured on your critical illness policy equal to the amount outstanding on your mortgage. This means that if you were to suffer a serious illness or injury the policy would pay off your loan in full. If you have a joint mortgage it is possible to also have a joint critical illness policy.

It is quite common to combine critical illness and life insurance cover in the same policy and this option is available whether you have a principal repayment loan or an interest only loan.

If you have a repayment loan the sum insured would reduce on both the critical illness and the life insurance components of the policy, in-line with the amount outstanding on your mortgage. If you have an interest only loan the cover on both parts of the policy will remain content over time.

Please note your policy will payout once on first event, whether that be a critical illness or death, or on the first critical illness or death if you have a joint policy.

The most common illness covered under a critical illness policy:

Heart attack

Stroke

Cancer

In addition to the above the illness being covered the following list is typical for a critical illness policy, please note that the lists of qualifying illnesses can vary between insurance providers.

Alzheimer's disease

Aorta graft surgery

Aplastic anemia

Bacterial Meningitis

Benign brain tumour

Blindness

Cardiomyopathy

Chronic lung disease

Coma

Coronary artery by-pass surgery

Creutzfeldt-Jakob disease

Deafness

Dementia

Heart valve replacement or repair

HIV or AIDs from an assault, blood transfusion, occupational duties or accident

Keyhole heart surgery

Kidney failure

Loss of independent existence

Loss of limbs

Loss of speech

Major organ transplant

Motor Neurone disease

Multiple Sclerosis

Paralysis/Paraplegia

Parkinson's disease

Progressive Supranulcear Palsy

Third degree burns

Total and Permanent Disability

Cover for children

› Mortgage life insurance and trusts

If a trust has been established then the payout from the insurer upon the death of the policyholder will fall to the trust and not to the personal estate of the deceased.

This means that those funds will not be subject to estate inheritance tax. Naturally, with mortgage life insurance those funds are destined for the mortgage lender and not the family of the deceased, however, where no trust is in place there can be solicitor's and probate fees not to mention the timescales involved in this process, very often in excess of 6 months.

It is often better to write the policy into trust and put your partner as the beneficiary, who can then pay off the lender upon receipt of the policy payout.

If you have a joint policy there is no need to write the mortgage life assurance policy into trust as the policy will payout upon first death to the surviving policyholder.

If you require life insurance advice, whether writing a policy into trust or simply finding the right cover for your needs, please do not hesitate to get in touch, we are here to help.

mortgage life insurance	mortgage life insurance answers
Mortgage Life Insurance is designed to cover your full mortgage loan amount. It is designed to financially protect you should the worst happen whether it is an interest only or a principal repayment mortgage. To provide mortgage protection against serious illness or injury (such as cancer or a stroke) you should also consider critical illness insurance alongside your mortgage life cover.	› What is mortgage life insurance? A mortgage specific life policy is similar to standard life cover although the plan is designed specifically to protect a mortgage and thus . The policy guarantees to pay-off you mortgage loan should the worst happen. This means that your family would be protected and able to stay in their home if you were to pass away. Cover is available whether you have a principal repayment loan or an interest only loan. › Do I need life insurance? Although it is not compulsory, most lenders strongly encourage you to take out life insurance to cover the loan and in some cases they may decide to raise the loan interest rate if you decide otherwise. Whether you decide to take out mortgage life assurance will naturally depend on yours and your family's financial position. What would be the financial consequence if either you or your partner were to pass away? Would there be sufficient funds to make the mortgage repayments? If not, then life assurance could be a solid way to protect the financial future of your family. › Level term mortgage life cover Mortgage term life insurance is designed to cover an interest only mortgage loan. The level of cover remains fixed throughout the life of the policy. In this way the level of cover remains in-line with the amount owed on the mortgage. This means that if the worst were to happen the mortgage could be paid off in full. For example, suppose you had a mortgage loan of £200,000, you should set the amount of cover at £200,000 and that cover would remain the same throughout the life of the policy and the loan. As with any life plan it is possible to write a policy in joint names and you can include critical illness cover under the same policy to provide additional protection. › Decreasing mortgage life cover Decreasing term mortgage life insurance is a policy specifically designed to cover a repayment mortgage. The level of cover provided by the policy is designed to decline over time in line with your outstanding mortgage. For example, suppose after 10 years the amount outstanding on your mortgage was equal to £100,000, the sum insure r life policy would also be equal to £100,000, and that cover would continue to fall until the loan was repaid. The premiums for decreasing term mortgage life assurance are significantly less expensive than for a level term policy as the insurers risk is reduced each year. Again, such a policy can be set up in joint names and you have the option to include additional protection in critical illness insurance covering you should you suffer a critical illness. › Level of cover How much you wish to cover is completely up to you. If the sole purpose of taking out life insurance is to cover your mortgage then it makes sense to set the sum insured on your policy equal to the amount outstanding on your home loan. Thus should the worst happent the cash lump sum would pay off your mortgage in full. If you want to have a little left over for your family should you die then it is perfectly reasonable to insure yourself for an amount in excess of your outstanding home loan. On the other hand, if you and your family have substantial savings then you could use those savings to top-up the insurance payout and thus reduce the premiums slightly. › Length of cover With mortgage life assurance it makes sense to set the term length of the policy equal to the term length of the mortgage. This is especially true for decreasing term life insurance as this type of policy is designed to exactly cover your loan as the amount outstanding falls over the years (the sum insured declines in-line with the amount outstanding on the loan). › Single or joint cover Yes, if you have a joint mortgage and would like to have a joint policy to protect your home loan simply add your partners details to the quote form below. A joint life plan will payout the full loan amount on first death only. The insurer will payout the sum insured directly to the surviving policyholder which means there is no need to write the policy into trust for inheritance tax purposes. It is important to recognise that should you have a joint plan and the policy pays out the plan terminates leavign the surviving policyholder with no cover. Joint policies are available for both decreasing and level term mortgage life cover and it is also possible to add critical illness cover to a joint life plan. › Option to include critical illness cover Critical illness insurance will payout a tax-free lump sum on the diagnosis of a range of specified critical illnesses. It is possible to set the sum insured on your critical illness policy equal to the amount outstanding on your mortgage. This means that if you were to suffer a serious illness or injury the policy would pay off your loan in full. If you have a joint mortgage it is possible to also have a joint critical illness policy. It is quite common to combine critical illness and life insurance cover in the same policy and this option is available whether you have a principal repayment loan or an interest only loan. If you have a repayment loan the sum insured would reduce on both the critical illness and the life insurance components of the policy, in-line with the amount outstanding on your mortgage. If you have an interest only loan the cover on both parts of the policy will remain content over time. Please note your policy will payout once on first event, whether that be a critical illness or death, or on the first critical illness or death if you have a joint policy. The most common illness covered under a critical illness policy: Heart attack Stroke Cancer In addition to the above the illness being covered the following list is typical for a critical illness policy, please note that the lists of qualifying illnesses can vary between insurance providers. Alzheimer's disease Aorta graft surgery Aplastic anemia Bacterial Meningitis Benign brain tumour Blindness Cardiomyopathy Chronic lung disease Coma Coronary artery by-pass surgery Creutzfeldt-Jakob disease Deafness Dementia Heart valve replacement or repair HIV or AIDs from an assault, blood transfusion, occupational duties or accident Keyhole heart surgery Kidney failure Loss of independent existence Loss of limbs Loss of speech Major organ transplant Motor Neurone disease Multiple Sclerosis Paralysis/Paraplegia Parkinson's disease Progressive Supranulcear Palsy Third degree burns Total and Permanent Disability Cover for children › Mortgage life insurance and trusts If a trust has been established then the payout from the insurer upon the death of the policyholder will fall to the trust and not to the personal estate of the deceased. This means that those funds will not be subject to estate inheritance tax. Naturally, with mortgage life insurance those funds are destined for the mortgage lender and not the family of the deceased, however, where no trust is in place there can be solicitor's and probate fees not to mention the timescales involved in this process, very often in excess of 6 months. It is often better to write the policy into trust and put your partner as the beneficiary, who can then pay off the lender upon receipt of the policy payout. If you have a joint policy there is no need to write the mortgage life assurance policy into trust as the policy will payout upon first death to the surviving policyholder. If you require life insurance advice, whether writing a policy into trust or simply finding the right cover for your needs, please do not hesitate to get in touch, we are here to help.
Also known as \| mortgage life cover \| mortgage protection life insurance
more mortgage life insurance information Mortgage Protection Life Insurance The most common form of home loan protection is mortgage protection life insurance. This type of policy is specifically designed to cover home loans. The death of a loved one is difficult to bear at the best of times but to add the financial implications involved with that loss can cause additional grief. Fortunately the insurance market can remove this financial risk and therefore render that additional grief unnecessary. In this respect mortgage protection life insurance is a significant form of family protection insurance. Mortgage Life Insurance Cover It is possible to insure the full amount of your loan with mortgage life insurance cover, even for very large home loan amounts. This means that the lump sum payout can be used to repay the debt in full. Critical illness insurance can also be added to the mortgage life cover to provide protection against serious illness or injury. The types of illnesses covered include cancer, heart attack and stroke. It is very common these days for mortgage loans to be taken out with a partner and as a result joint mortgage protection has become very popular (with or without critical illness). Quotes for joint cover can easily be provided. With a joint plan both partners can rest assured that they will not have to undertake repayment of the full loan amount on their own should one partner pass away or suffer a critical illness. Mortgage Life Cover Types There are two main types of mortgage life cover. The most common is decreasing term mortgage life insurance which is designed to protect a capital (principal) repayment home loan. With this type of cover the sum insured declines each year over the term of the policy in accordance with the debt amount outstanding. The other frequently used type of cover is level mortgage term life insurance which is used to protect an interest only loan. The level of mortgage protection life insurance cover remains fixed throughout the policy term in accordance with the constant amount of debt outstanding.

Mortgage Life Insurance