Mortgage Protection Insurance
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What is mortgage insurance?
Mortgage insurance plans are ultimately designed to help protect your mortgage loan from the risk of default by covering you for accident, sickness, unemployment and even death.
It is likely that your home is the largest investment you have made, and as such it is important to ensure that you have adequate mortgage protection insurance to cover you for these risks.
What does mortgage protection insurance cover?
By combining Mortgage Payment Protection Insurance and Mortgage Life Insurance and Critical Illness Cover you are covered against a range of both short term and long term risks.
These risks include protecting your monthly mortgage repayments against short-term accident, sickness or unemployment and the unfortunate event of death during the term of the mortgage loan.
Mortgage payment protection
This type of home mortgage insurance covers your monthly loan repayments from the risk of accident, sickness and unemployment (forced redundancy).
If you are unable to work for any of these reasons the plan pays a monthly benefit until you either return to work or reach the full benefit term of either 12 or 24 months.
It is possible to cover 100 per cent of your monthly repayments plus an additional 25 per cent cover for other monthly home costs, such as council tax and utility bills.
If you have a joint loan each you can apply for joint mortgage insurance covering the full repayment each or split the mortgage insurance protection proportionately to each partner's contribution to household income.
Mortgage life insurance
Life insurance for mortgages is designed pay off the outstanding balance on your loan should die within the policy term.
The payout from the policy can be used for anything you so wish without restriction, whether that be for mortgage repayments, utility bills or general living expenses.
If you have a principal repayment mortgage loan this is usually the most suitable option. With such a mortgage protection life insurance plan the level of cover declines over time aligning with the amount outstanding on your loan.
If you have taken out a mortgage with your partner it is possible to take out joint life insurance, which would payout should either partner pass away.
If you have an interest-only mortgage then a level term insurance policy is usually the most suitable option. With this type of mortgage life insurance cover the level of protection remains fixed throughout the life of the plan.
There is an option to include indexation which ensures your sum assured rises year on year in line with inflation by tracking with the Retail Price Index.
Including critical illness cover
With both level and decreasing term mortgage life cover it is possible to include critical illness insurance, which means that the plan would also payout if you were to suffer a serious illness or injury. Plans usually cover over 35 medical conditions, including cancer and heart attack.
It is important to understand the definition of the illness on which the insurers will pay a claim as the policy wording can differ significantly from insurer to insurer.
Do I need advice?
As independent mortgage life insurance brokers we are ideally placed not only to obtain you the cheapest quote from our large panel of insurers but also to provide impartial advice, ensuring that you get the right cover for your needs.
Whether you have a quick policy question or require a complete review of your mortgage protection set-up we are here to help. It is our job to ensure you have all the information needed to make as informed decision as possible. Please don't hesitate to pop us a call on 0208 432 7333.
We are insurance experts passionate about educating our clients and providing a 5-star service.
We are here to help you understand the financial risks you face so that you can make informed decisions when it comes to protecting yourself, your family and your assets.Changing the world one policy at a time!