MORTGAGE PROTECTION
WHAT IS MORTGAGE PROTECTION?
Mortgage protection insurance is a type of life insurance designed to pay off your mortgage if you were to pass away — and some policies also cover mortgage payments (usually for a limited period of time) if you become disabled.
DO I NEED MORTGAGE PROTECTION INSURANCE?
Mortgage protection insurance isn't compulsory, however, one in two people in the UK are diagnosed with Cancer in their lifetime, you should think very carefully about how you will keep up mortgage repayments if you find yourself out of work for a while. You don't want to be financially exposed, leaving your lender with no option other than to repossess your property, for an affordable monthly premium, you could protect your mortgage in the event of such circumstances.
DOES MORTGAGE INSURANCE PAY OFF
YOUR HOUSE IF YOU DIE?
Rather than paying out a death benefit to your beneficiaries after you die as traditional life insurance does, mortgage life insurance only pays off a mortgage when the borrower dies as long as the loan still exists. This is a big benefit to your heirs if you die and leave behind a balance on your mortgage.
Grow Your Vision
Mortgage Protection Insurance with Critical Illness Cover is a specialised type of insurance designed to protect homeowners by helping cover mortgage payments in case the policyholder is diagnosed with a serious illness.
It combines two key elements:
Mortgage Protection Insurance: This is a life insurance policy that specifically covers your mortgage. In the event of your death, the insurance payout is used to pay off the remaining mortgage debt, ensuring that your family won't be left struggling with home payments.
Critical Illness Cover: This feature provides a lump sum payout if you are diagnosed with a serious illness that’s covered under the policy (e.g., cancer, heart attack, stroke). The payout can be used to pay off or reduce the mortgage, help with medical bills, or cover living expenses while you’re unable to work.
How It Works: Linked to the Mortgage: The policy is often set up to match the amount and term of your mortgage. As you pay off the mortgage over time, the cover usually decreases, reflecting the outstanding balance of the mortgage.
Payment Upon Diagnosis: If you are diagnosed with a critical illness that’s listed in your policy, you receive a lump sum payment.
This payout can be used to pay off part or all of your mortgage, depending on the policy amount.
Death Benefit: If the policyholder passes away during the term of the policy, the insurance pays off the remaining mortgage balance.
Key Benefits: Financial Security: It helps ensure your family will not lose the home if you become seriously ill or pass away.
Living Protection: Critical Illness Cover provides financial support if you’re unable to work due to illness, reducing financial stress when you need to focus on recovery.
Considerations:
Policy Terms: Critical Illness Cover typically only applies to specific illnesses defined in the policy.
Common covered conditions include cancer, heart attacks, and strokes, but the list can vary.
Decreasing vs. Level Term: Mortgage protection insurance is often a decreasing-term policy (the payout reduces as the mortgage balance decreases), while some policies might offer level-term coverage, where the payout amount remains the same.
Cost: Adding Critical Illness Cover to your mortgage protection insurance increases premiums, but it provides valuable peace of mind in case of unexpected health issues. It’s a valuable tool for homeowners looking to safeguard their home against financial risks linked to illness or death.