Do You Need Life Insurance For A Mortgage
Our Mortgage and Life Insurance Service
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Do you need life insurance for a mortgage?
If you are currently thinking about taking out mortgage finance, to purchase property, you may be wondering do you need life insurance for a mortgage?
Lenders do not commonly require their borrowers to take out life insurance policies so it is not normally a legal requirement to take it out. However if you are thinking about getting a joint mortgage, or if you have any dependants mortgage life insurance can provide a way for them to keep up with the mortgage repayments if you were to die.
Even if you do not have a joint mortgage or any dependants, you may wish to seek out insurance to help you make your mortgage payments if you were to fall critically ill and could not work. It can sometimes be cheaper to purchase critical illness mortgage insurance as part of a combined policy including mortgage life insurance than to purchase it as a standalone product.
Types mortgage life insurance:
- Decreasing term life insurance – This is the most commonly available kind of mortgage life insurance, with this type of plan the insurance payout decreases in line with the your mortgage. So the more of your mortgage debt that you pay off the amount the insurer would pay would decrease in reflection of this, as such this kind of plan is only really suitable for repayment mortgages.
- Level term mortgage life insurance – With this type of plan the amount a plan will pay out stays the same over the entire course of its term, which might make it better suited for those with an interest-only mortgage. It could also provide the dependants of a policy older on a repayment mortgage with some extra funds after the mortgage is paid off. The premiums for this type of insurance as a result more expensive than with decreasing term.
When looking into mortgage life insurance you will find that many insurers offer a selection of optional extras such as critical illness cover which, means you could get a pay out if you fell critically ill and could not keep up with your repayments as a result. Each provider may varies what medical conditions will qualify for this so it is wise to read each policy carefully to ensure you understand what it would provide you with cover for.
Another optional extra providers may offer is a ‘waiver of premium’ which essentially means that if illness or injury meant that you could not work and as a result could not pay your premiums then the insurer would still be able to provide you with cover. This type of extra can normally only be bought at the very start of your policy.
Finding mortgage life insurance
There are many providers of mortgage life insurance plans; therefore it is a good idea that before you take out a policy you shop around to compare the market to try and find the best deal for the level of cover you want. Remember that although your mortgage lender may offer life insurance it may not be the best deal available to you.
Call our Mortgage & Life Insurance Team or Request a Callback.