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Taking out a mortgage is often the biggest financial commitment you’re every likely to make – and your home is the security against the loan. So how do you make sure that your home is protected if something happens to you?
Mortgage Protection is a form of life insurance policy that decreases over time in line with your mortgage balance and is designed to pay out a lump sum to pay off the remaining amount if you die or suffer a critical illness (depending on the type of cover chosen). This means you are able to protect your family’s home should the worst happen.
One of the more commonly heard of life insurance products is Mortgage Protection. A Mortgage Protection life insurance policy can be arranged in many ways, whether this be cover that pays out in the event of death, upon the diagnosis of a specified critical illness or a combination of both.
Mortgage Protection is designed to provide life or critical illness cover to the meet the amount of your mortgage, meaning for every monthly payment that you make on your mortgage, the level of cover that you have will decrease in line with your remaining mortgage balance.
This means that should you pass away or suffer a critical illness, you will have the funds to repay your mortgage, keeping your family secure in their home as well as reduce your financial outgoings should you be unable to work long term.
These types of policies can be more cost effective than stand alone life and critical illness cover, as the sum assured decreases over time rather than guaranteeing a fixed lump sum pay out.
Mortgage Protection is a great cost-effective way to provide some financial security for yourself and your family, and we often advise our clients to look at a Mortgage Protection policy in combination with other life insurance solutions such as income protection or family income benefit.
Whatever your situation, FOCUS are committed to having a down to earth conversation about your needs, finances and current situation to find the most appropriate solution for you. Having the right life insurance cover in place means that should the worst happen, you and your family’s financial needs are taken care of.
Mortgage Protection – otherwise known as decreasing cover, is a life and/or critical illness policy that is designed to repay your mortgage in full if something happens to you. The amount of cover decreases over time in line with the monthly payments that you make and your reducing mortgage balance.
It is not the same as mortgage payment protection insurance
Yes- Mortgage Protection is a type of life insurance policy that can provide a lump sum payout in the event of death, the diagnosis of a specified critical illness or a combination of both. The difference between a standard life insurance policy and Mortgage Protection is that with a Mortgage Protection policy, the sum insured reduces over the term of the policy in line with your mortgage.
Mortgage protection policies all come with the same standard options as traditional life and critical illness contracts. These can include additional benefits and options such as cover for your children, payouts for broken and fractured bones, and access to specialist medical help and remote GP services.
The plan will have no cash in value at any time and will cease at the end of the term. If premiums are not maintained, then cover will lapse.
The policy may not cover all the definitions of a critical illness. For definitions please refer to the key features and policy document.