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What is Mortgage Life Insurance?

If you own a house you will probably find the mortgage repayments difficult to keep up with at some point during your working life. You may be the provider of the only income for the house, therefore if you were to die your family would be left in a difficult financial situation as the mortgage repayments would then become their responsibility. If they have no means of making these payments they could lose the home. 

Does this situation sound like something that could happen to you? If so you might want to do something about it. You can take out mortgage insurance (an insurance policy usually offered by your mortgage provider). In the event of you or your family being unable to make the mortgage repayments the insurance will step in and take over the responsibility until you can. However, mortgage insurance is often very expensive and you will only benefit from the insurance policy if something goes wrong. 

As an alternative you could consider taking out a life insurance policy. A mortgage life insurance policy is a policy which will protect your home in the event of your death. There are many options, but a common option is to take out a term mortgage life insurance policy for the duration of your mortgage. If you die within this term the remaining balance of your mortgage will be paid off, meaning that your home will no longer be at risk. Obviously if you were to take out a whole mortgage life insurance policy and die after your mortgage has been paid off you won't receive any mortgage pay off, which could mean that you have wasted a lot of money. 

Although life insurance can be expensive this is very often a much better avenue to explore than mortgage insurance. Choosing a term mortgage life insurance policy will protect your family should the worst happen to you during a difficult financial period and if you outlive your insurance policy you can sometimes choose to renew the policy for another agreed term. 

Finding a mortgage life insurance policy is a complicated business, therefore it is advisable that you speak to an Independent Financial Advisor or an independent mortgage broker. Your choice of mortgage is critical and if you choose the wrong one you will be left in the awful position of wasting a lot of money on a policy that has no use to you whatsoever.

 

Disclaimer: The information contained on this page is not intended, nor should it be construed as providing any form of financial advice or guidance as to which insurance product/policy is right for you. If you are unsure as to which product meets your requirements/needs you should always seek advice from an Insurance Professional.

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