Life Assurance - Protecting your mortgage
Below is a MRR and PLR article in category Finance -> subcategory Mortgage.
Life Assurance: Safeguarding Your Mortgage
Overview
When purchasing your first home, life assurance might not be at the forefront of your mind. However, many mortgage lenders require life insurance to ensure the loan is repaid if the borrower passes away. Even without this requirement, it’s wise to consider life assurance if you have a partner or family dependent on your income for mortgage payments.
Current Concerns
Sainsbury’s Bank has highlighted that approximately 4.2 million people lack life assurance with their mortgages, leaving an estimated £217 billion worth of loans unprotected.
Types of Life Assurance
Several types of life cover exist, with costs varying based on factors like coverage amount, term length, age, smoking status, and overall health. Shopping around is advisable, as monthly premiums can differ among providers. Keep in mind that the amount might increase after completing your application.
Term Life Assurance
Term life assurance is the most common for mortgages. It pays a lump sum if the policyholder dies within the term. If not, no payout occurs.
Decreasing Term Life Assurance
This is typically the most affordable option. The coverage amount lessens over time to match mortgage repayment liabilities, fitting a capital and interest mortgage where the debt decreases by the end of the term.
Level Term Life Assurance
Here, the payout amount stays constant, making it suitable for interest-only mortgages where the principal remains unchanged.
Additional Benefits
Critical illness cover is a common add-on, providing a payout upon diagnosis of illnesses such as:
- Cancer
- Heart attack
- Multiple sclerosis
- Stroke
It’s important to check which conditions are covered, as this can differ significantly between providers.
By understanding and selecting the right life assurance, you can protect your home and provide peace of mind for your loved ones.
You can find the original non-AI version of this article here: Life Assurance - Protecting your mortgage.
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