Choosing Life Cover To Protect Your Mortgage

Choosing Life Cover to​ Protect Your Mortgage
Buying a​ family home is​ a​ time when many people begin thinking about taking out a​ life insurance policy to​ go along with it. a​ mortgage is​ very often the​ most significant financial decision that any individual makes,​ and it​ is​ always prudent to​ find a​ way of​ protecting your mortgage,​ to​ ensure that your loved ones will not suffer financially from the​ loss of​ your income if​ you​ should die. a​ carefullychosen life insurance policy is​ an ideal method of​ achieving this protection.
Level Term and Decreasing Term Life Cover
The most common way of​ protecting your mortgage is​ to​ purchase term life assurance. Selecting life cover for mortgage protection requires making a​ choice between two different types of​ insurancelevel term and decreasing term insurance.
If you​ purchase level term life cover,​ the​ amount you​ are insured for remains constant over the​ life of​ the​ policy. With a​ decreasing term policy,​ on​ the​ other hand,​ the​ size of​ the​ potential payout decreases as​ the​ mortgage is​ paid off. Regardless of​ which type you​ choose,​ the​ policy ends automatically if​ a​ claim is​ made,​ or​ when the​ mortgage is​ paid in​ full.
The Cost of​ Mortgage Life Insurance
The cost of​ mortgage life cover depends on​ several factors. the​ most important determinant of​ the​ cost of​ the​ policy is​ the​ terms and conditions of​ your mortgagethe amount you​ borrow,​ and the​ amount of​ time youll require to​ pay the​ mortgage in​ full. as​ will all types of​ life cover,​ the​ cost also depends on​ your lifestyle,​ age,​ and physical health. Lastly,​ the​ type of​ policy you​ chooselevel term or​ decreasing term insurancealso affects the​ cost.
In most cases,​ level term mortgage cover is​ more expensive than the​ decreasing term variety. This is​ because with decreasing term insurance,​ the​ size of​ the​ payout decreases over time,​ so the​ overall cost of​ premiums is​ reduced to​ reflect that. Because all other aspects of​ these two types of​ policies are more or​ less equalin both cases,​ the​ mortgage is​ fully paid in​ the​ event of​ a​ claim being madethe type of​ insurance you​ get will typically depend on​ how much you​ can afford.
Level term cover does offer one advantage that decreasing term insurance does not. Because the​ size of​ the​ payout is​ constant over the​ life of​ the​ policy,​ your dependents will benefit from increased financial security if​ there is​ money left over after the​ mortgage has been paid. For this reason,​ level term insurance should be your goal if​ its affordable. This type of​ insurance provides another advantage if​ you​ have an interestonly mortgage,​ as​ your repayments increase over time,​ and equity is​ slow to​ builda level term mortgage can provide increased financial security in​ this case.
Other Considerations
Two other important decisions to​ make are whether to​ choose joint insurance or​ two separate policies for you​ and your partner,​ and whether or​ not to​ purchase additional critical or​ terminal illness cover. Some policies may include this coverage automatically,​ and some dont,​ so its always important to​ read the​ fine print and make sure you​ understand what youre covered for. By the​ same token,​ a​ joint policy isnt always the​ best solution,​ even for a​ married couple,​ so its equally important to​ check investigate all your available options thoroughly before deciding between joint and separate policies.

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