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.