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Mortgage Insurance
Generally speaking, mortgage insurance refers
to a life insurance policy that is taken out when someone
applies for a mortgage. It's not compulsory, but many people
want to protect their dependants in case of their death.
Mortgage insurance will pay out lump sum to your family
should you die during the term of the policy. If, however,
the policy runs it's complete term and no claim is made,
you will not receive any money back from it.
Common mortgage insurance types that can be taken out by
couples or individuals are
A decreasing term mortgage insurance policy. This means
that the amount that the policy will pay out in the event
of your death, decreases each year in line with the reducing
balance. This type of policy is taken out with a repayment
mortgage (interest and capital).
A level term mortgage insurance policy. The amount that
the policy will pay out in the event of your death remains
the same throughout the term of the mortgage. This type
of policy is designed to run alongside an interest only
mortgage (where the balance would remain constant throughout
the duration of the mortgage).
As with many other types of policy, there are often options
that you can add to it, such as covering you for critical
illness as well as providing health insurance. |
