Mortgage life insurance cover
What is mortgage life insurance cover?
Mortgage life insurance cover is a form of life insurance which is designed to pay off the mortgage of a customer who loses their life during the term of their policy.
Mortgage life insurance cover will typically be offered to a customer when they take out an mortgage, and works in a similar way to a standard life insurance policy, only that instead of paying out a lump sum to the family of the customer that dies, it just automatically pays off the mortgage instead.
This has its advantages and disadvantages. The policy is cheaper than standard term life insurance which is normally offered alongside a mortgage, because the amount of money that is paid off decreases every time you make a monthly mortgage payment, so as the risk of you dying as you get older increases, the amount of money the insurer will have to pay out decreases.
A term life insurance policy would see the same amount paid out, whether you died a week into the policy, or a week from the end of it, with the family having far less mortgage to pay off, and far more money left over to use for other things.
Is mortgage life insurance cover for me?
There are many pros and cons of both term life insurance and mortgage life insurance cover and the question you must ask yourself is how your family would cope if you died at any point throughout the mortgage and were no longer able to provide for them.
If the answer is that they would just need their mortgage cleared to be financially stable, because of your other halves salary, then a mortgage life insurance cover policy could be the right one for you, particularly as it is cheaper.
A term life insurance policy will pay out the same lump sum, whatever point a customer dies during the term, and many families would need the mortgage cleared, and extra money left on top to be financially comfortable living. These families may need an additional term life insurance cover policy for that extra amount, taken out on top of the mortgage life insurance cover, or if it is cheaper, then just one large life insurance policy which covers at least the mortgage, and the extra lump sum you feel your family would need to live off.