Life insurance is a type of insurance policy that pays a lump sum to your named beneficiary if you die during the term of the policy. Life insurance policies can cover your mortgage payments.
There are different types of life insurance policies that you can select, according to what you require at the time you are looking to purchase the policy. The policies that you will hear most about are term life and whole life.
Term life insurance policies will only pay out if you pass during policy term set. Whereas, whole life insurance policies cover you for your entire life.
When it comes to a whole life insurance policy, your lump sum is provided when the policy ends after the policyholder dies.
To find out more information about life insurance policies, check out our recent blog post dedicated specifically to choosing life insurance.
Mortgage Protection Insurance:
Mortgage Protection Insurance is a type of life insurance policy. This life insurance policy is designed to clear your mortgage account balance if you pass away.
Mortgage protection insurance is bought at the same time you buy your home and is in effect for an amount of time equivalent to your mortgage duration. This policy can be reviewed and replaced at any stage during the mortgage term.
There are four main types of mortgage protection insurance policies; reducing term cover, level term policy, serious illness, life insurance policy.
Level term policy, on the other hand, is a type of cover which means that the amount you are insured for and your premium stays the same. This policy is intended to pay off your mortgage whilst the residual balance goes to your assets.
Lastly, serious illness cover is a type of cover that pays you a tax-free lump quantity if you have an illness covered by your plan. It can be added to your mortgage protection policy.
To be clear and simple, the next type of mortgage protection policy appropriately named ‘reducing term cover’ (as the name suggests), decreases with the balance of your mortgage. With that in mind, the policy comes to an end once your mortgage is paid off.
The Difference Between Mortgage Protection and Life Insurance?
The main difference between Mortgage Protection Insurance and Life Insurance is that Mortgage Protection insurance is designed to cover just your mortgage repayments if you die. Life insurance policies, on the other hand, are mainly to protect you and your family.
Another point of minor difference between these policy types is that with a life insurance policy the cover remains the same throughout the policy.
So now onto to next important questions, Read these 2 other Improtant Articles on Life Insurance for Mortgage.
Can I Get a Mortgage Without Life Insurance?
In conclusion, if you don’t need life insurance to get a mortgage, then yes you should also assume that you will be able to get a mortgage without life insurance. All you need for a mortgage is a house or building insurance and mortgage protection.
Some types of covers are recommended just for the sake of protection and comfortability, but they are entirely dependent on your current or (what you might predict to be your) future circumstances.
Things like serious illness cover or income protection can help you, but they are not compulsory.
To find out about the life insurance or mortgage protection policies we offer please visit our website or click the links as per your requirements. We offer an easy to use the comparison tool to get the best quote!