What is Mortgage Protection?
Mortgage protection is a common form of life insurance. It ensures that your mortgage will be paid off if you die or are diagnosed with certain specified illnesses during the term of your plan (if specified illness is chosen).
If you die during the term of your plan, whatever is left of your mortgage will be paid off, as long as your mortgage repayments are up to date and your mortgage interest rate has not, on average, risen above the interest rate assumed.
Normally, you will transfer ownership also known as assignment of your Mortgage Protection plan to your mortgage lender. And, as you pay off your mortgage, your cover will fall to reflect the reducing amount you owe on your mortgage. The fact that the level of cover reduces over the term of your plan helps to keep the cost of this plan lower than other forms of life assurance.
When taking out Mortgage Protection you can often add on a Specified Illness plan which will provide a cash lump sum to help you continue to pay off your mortgage and other bills should you be diagnosed with one of the specified Illness covered by the plan.
Who needs mortgage protection?
If you have a mortgage, you need mortgage protection. Generally, your bank will request that you have a mortgage protection policy in place before the mortgage be put in place.
The payments and benefits under this plan are guaranteed. That means you will always know how much you are paying and how much we will pay out. The amount of life insurance you need and the length of time you should be protected for will depend on the amount of your mortgage and how long you have left to pay it off.