Mortgage Life Insurance

2. Level Term- This is where the pay-out is fixed for the duration of the policy

These are expensive policies as they pay a specific lump sum if you pass away within a specified time.

For example; You’d be paid £200,000 if you die within the next 18 years. This is a better option if you want to leave a lump sum for your family to pay for more than your mortgage.

Level-term is also a better option if you have an interest-only mortgage. With this, the lump sum would be available to cover the capital than the repayments.

Should I get mortgage life insurance?:

A mortgage life insurance is a very cheap and easy way to ensure your dependants have financial backups when you are no more.

Ultimately, you don’t need life insurance so you’ll have to weigh the monthly cost to see if it’s worth it.

Here are two key points to help you make a good consideration:

• If you don’t have dependents, you don’t need life insurance

A mortgage life insurance is definitely not needed when you have no dependents.

It would imply that the person who inherits your property doesn’t need to sell it, unless they’re in a good position to pay off your mortgage, or could get one themselves.

• If you already have a life insurance policy, it’s likely you are covered

Having life insurance would definitely give your dependants a lump sum when you die. If they want to use the lump sum to pay off the mortgage, you have to ensure the amount you’re covered for is more than the amount you owe, and the policy coverage is in force for as long as the mortgage duration.