What is Mortgage Life Insurance?
Mortgage Life Insurance is sometimes called Mortgage Protection Insurance.

However, this can be confusing because Mortgage Protection Insurance is different to Mortgage Payment Protection Insurance - the difference is explained below.

STEP 1 of 2
Type of cover
Life Insurance       Mortgage Life Insurance
 
Cover Level (£)

Number of years
Do you want:  
Critical illness cover
Family income benefit
 

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What is Mortgage Payment Protection Insurance?
Mortgage Payment Protection Insurance pays your monthly mortgage repayment if you were off work due to sickness, accident, or unemployment. (Don’t forget that your home is at risk if you fail to keep up the repayment of loans secured against it.)
Should you insure for accident and sickness or accident, sickness and unemployment?
The Mortgage Payment Protection policies we offer gives you the option of insuring yourself for:
Should you have a “Guaranteed” or a “Reviewable” policy?
A Guaranteed policy is usually better value overall but a Reviewable policy will be cheaper at the outset.
Should I include Terminal Illness Insurance?
Terminal Illness Insurance is generally included at no extra cost on all Mortgage Life, Life and Critical Illness policies.
Mortgage Life Insurance ensures that your repayment mortgage would be repaid if you died during the policy’s term. Under the conditions of your policy, the money can be sent to your next of kin or direct to your mortgage lender.

All the Mortgage Life Insurance policies we sell include Terminal Insurance at no extra cost. With Terminal Insurance, if you had an illness or condition from which your Doctor expected you to die within 12 months of diagnosis, the policy would pay your mortgage off immediately you were diagnosed - it does not wait for you to pass away. This clearly reduces the stress during a very stressful time.

Before you can get a quotation for Mortgage Life Insurance, you will be asked whether your mortgage is an interest only mortgage or a repayment mortgage. This is because, if you have a repayment mortgage, the sum you need insured decreases as your mortgage repayments reduce the sum outstanding to your mortgage lender. Therefore, you need insurance that reduces the sum insured in line with the sum owed to you mortgage lender. This is exactly what Mortgage Life Insurance provides.

When you have an interest only mortgage, the sum owed to your mortgage provider remains constant as your monthly repayments only repay the interest due and not any of the capital you borrowed. In these circumstances you need normal, level cover, life insurance.

All proceeds from insurance policies are tax-free.

If your mortgage is held under joint names both mortgagees should be insured. The cheapest way to achieve this is with a Joint policy. (some mortgage providers will insist on this).

For mortgage protection, Joint policies are always written on “first life”. This means that the policy will pay out if either of the policyholders were to die whilst the policy is in force. (It is important to note that once a Joint policy has paid out on a first death, the policy is terminated - it will not pay out again if the second person were to die.)

As Mortgage Life Insurance provides steadily decreasing cover, it is much cheaper than normal Life Insurance which provides level cover.

Please note that all forms of Life Insurance never have any investment value. Once the policy comes to the end of its term, that’s it, the policy is finished.

PLEASE NOTE:
If you need insurance that pays your monthly mortgage repayments if you were off work through sickness, accident or unemployment, then you want Mortgage Payment Protection Insurance.

If you want insurance that totally repays your outstanding mortgage if you became critically ill, you need Critical Illness Insurance.

Frequently Asked Questions related to the above topic.
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