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About Mortgage Life Insurance?

There are some things in life that are worth protecting, and when you find one of these things, you want to make sure that you have the right cover in place. That is why in some cases you are going to need mortgage life insurance, otherwise known as mortgage protection to give you the necessary peace of mind that you need. In this article, we are going to be looking at mortgage life insurance, and answering some of the questions that you might have about it, as well as providing you with as much information as possible so that you don’t need to read three different articles to feel informed. If you want to know more about mortgage life insurance, then keep reading down below and by the time you are finished, just about all of your questions will have been answered!

What Is Mortgage Life Insurance?

To start off, we need to look at what exactly mortgage life insurance is. This type of insurance is taken out to protect your mortgage in case you pass away before you have finished making all of your mortgage repayments. What happens is that if you do die, the insurance policy will pay out the rest so that your spouse or any dependents you have will not have to worry about making these monthly payments. It is hard to lose a loved one, and having that extra financial burden and trying to figure out where this money is going to come from when you are dealing with this grief is something that nobody wants to do.

It’s probable that you have actually heard of this cover before because it is also known as mortgage life assurance as well as mortgage protection. They all come down to the same policy and cover, so don’t get confused if you hear these different names floating around all the time. Think of it this way, at some point you are going to die, it’s just a fact of life and one that we can’t avoid forever, that’s why some people call it mortgage life assurance because it is going to happen one way or another. You might have paid off your mortgage when your time is up, but you might not want to take this risk if you have people that depend on you.

Do You Need To Have It?

The cost of key man insurance is based on each individual life assured. It’s calculated much like normal

Not everyone is going to need this kind of insurance so it is important to consider all the reasons why you think you should versus think you shouldn’t before you commit. To make sure that you are making the right choice, we are going to go through some of the reasons that you would need to have this kind of insurance, and then some of the reasons that you wouldn’t. Okay, so first you are going to need mortgage life insurance if you have people who depend on you financially, such as a spouse or children, or anyone who relies on you to provide for them. Without this protection, the people that you love most are going to end up having to find money to pay this monthly bill, and this could end up being a massive problem in their lives. By taking out a policy like this, you are protecting them from having to do this while they are still grieving from losing you.

Another reason that you could need mortgage life insurance is that some lenders require you to have some kind of policy in place before you buy a property. Now, there are many different types of policies that you can choose from but like we said above, if you have any dependents then this is certainly one that you should be considering. Just make sure that you have gone through all of your options before you settle down on one policy, and know the ins and outs of what is written in your contract to avoid any confusion or disappointment.

So, if you don’t have dependents, then you are definitely not going to need this type of cover. It is just going to be something that you are paying for that is going to be no use once you are gone, which is kind of the whole point of having it in the first place. For this reason, you should be looking into one of the other types of mortgage cover instead such as critical illness cover, or anything else that makes sure you’re covered while you are still alive.

How Does It Work?

Another thing that you should be aware of is how mortgage life insurance actually works. So, when you take out the policy, it will protect your mortgage if you die while you are in the process of making the repayments. You will find that when you buy a house, the provider of the mortgage might try to sell you life cover on the property, but do be aware that you are not under any obligation to buy from them and you can look elsewhere to compare quotes. Finding the policy that works for you is important, and you should not feel pressured to settle for one that doesn’t provide you with everything that you feel you need.

As the length of your cover goes on, the amount that it is worth will decrease just like your mortgage. So, you are going to be paying the premium for the value of the mortgage and then it will go down every time you make a repayment yourself. Then, if you do die before you manage to finish making the payments, the insurance company will pay out the amount that if left on your mortgage so that it is completely paid off. Once this has been done, your mortgage will no longer exist, and the house will be fully owned by you, which can then be passed on to whoever you have left it to in your will. Or, it stays in your name for the time being, and the people who are living there continue to do so until they change the name after you have died.

What Do You Need To Know?

It is also important for you to know that you are covered even if your lender ends up going bust.

We have already covered quite a lot of content in this article about mortgage life insurance, but there are still a few more things you need to know. One of these things is that while some companies will require you to have some kind of insurance policy in place to be able to purchase a property, some will not, and in these cases, you are under no obligation to take out any kind of insurance on your mortgage. We are not saying that this is the smartest idea as you never know what is going to happen in life and when you are going to need this protection, but it is certainly an option to consider.

You should also be aware that mortgage life insurance is generally cheaper when there is less risk that you are going to die. Now, on its own, that statement sounds a little silly and random considering we are never going to know when or how we are going to die. But, what this actually means is that if you have any long term health conditions or if you are a smoker, an alcoholic or any way in bad health, then this is going to cost you more. If you are generally in good health and there is no reason to believe that you are in any immediate danger of dying from any kind of health issue, then the insurance cover is going to cost you quite a significant amount less.

Now, when you are looking at taking out a policy, you need to be sure that you are happy with all the details. You will likely be offered two different options about the cover you want to purchase, and this is whether you want it to be fixed or reviewable. This is really important, so make sure you are paying attention to what we say next very carefully. If you get your premiums guaranteed, you know that your insurer is not going to change the cost, and the price that you have agreed upon in the beginning is exactly what you are going to pay for the rest of your life. If you decide to go for a reviewable premium because they look cheaper, remember that this means your insurer can change the price and this is not usually going to work out in your favor. It is more likely that the price of the premium is going to soar when you are on a reviewable policy as you get older. For this reason, it is very important that you know exactly what you are doing, and try to get a guaranteed premium where possible even if it will cost you a little more at first.

Something else that is really important is that you write down your insurance policy in trust so that it cannot be touched by the tax man. What a lot of people don’t realize is that if you die, your mortgage life insurance will come together with all of your other possessions and form your estate and if this happens, it can be subject to high amounts of inheritance tax. But, to make sure that this doesn’t happen you are going to need to write your policy in trust when it is taken out. It is important to note that you can’t do this later, and it needs to be done when you first take out the insurance policy. When you write something in trust, this means that it is paid out directly to your dependants, meaning that it will never become part of your estate. By doing this, you make sure that it is not going to be subject to tax, and that it is paid out a lot quicker than the rest of your estate.

Like we said above, if you seem to pose any significant health risk to yourself, then you are going to find that the prices rocket for you. As such, if you want a shot at lowering the premium, then giving up smoking and alcohol is going to be a good thing to do. As you know, when you smoke or drink heavily, it decreases your life expectancy so cutting this out of your life could be extremely helpful if you need to find a way to get the price down a little.

It is also important for you to know that you are covered even if your lender ends up going bust. If your insurer goes out of business for any reason, your policy will be taken by the Financial Services Compensation Scheme, and they will try to find another company to take over the policy. If you have any claims, then you should definitely be covered, but if you don’t, then it might be a little while before the FSCS can find someone else to take over your policy. Don’t panic if you can help it, because they are very good at what they do so you are going to be in good hands. Many things can happen over the span of a policy that lasts as long as mortgage life insurance does, so you need to be prepared that this could happen.

You will also find that if you use an insurance broker, you are likely to get a better deal on your insurance premium. You are going to have to pay this service separate from the policy that you are purchasing, but it is going to be worth it in the end when you have a great policy that you wouldn’t have been able to negotiate on your own. It is not likely that you will have to pay this person more than once, so don’t worry about ongoing costs here.

We hope that you have found this article helpful, and now have all the information that you need about mortgage life insurance. If you do have any other questions, then you can contact an insurance broker or a provider to get more details.

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