Life Assurance Protecting Your Mortgage

Life Assurance Protecting Your Mortgage



Life Assurance Protecting your mortgage
The first time that many of​ us will think about life assurance is​ when buying our first home. Many mortgage lenders insist that life cover is​ taken out when offering a​ mortgage,​ to​ ensure the​ loan will be repaid if​ the​ borrower dies. Even if​ this is​ not the​ case,​ it​ is​ prudent to​ do so if​ you​ have a​ partner or​ family who will suffer from losing your income to​ help make monthly mortgage repayments should you​ die.
Sainsbury’s Bank this year warned that there are up to​ 4. 2 million people that do not have life assurance with their mortgage. This equates to​ an estimated £217 billion worth of​ mortgages not protected by life cover.
There are different types of​ life cover. Cost depends on​ many things such as​ amount covered,​ term,​ age,​ smoker or​ nonsmoker and general health. Monthly premiums can vary in​ price dependent on​ provider,​ so shopping around is​ a​ good idea. However,​ when comparing prices you​ should consider the​ fact that the​ amount could actually increase after you’ve completed the​ application details.
Term life assurance is​ the​ most common type of​ life assurance used in​ conjunction with a​ mortgage. Term assurance pays out a​ lump sum should the​ life assured die within a​ certain amount of​ time. if​ this does not happen,​ the​ policy pays nothing.
Decreasing term life assurance is​ typically the​ cheapest form of​ cover. the​ amount assured decreases in​ line with outstanding mortgage repayment liabilities. This suits a​ capital and interest mortgage where the​ outstanding capital is​ repaid by the​ end of​ the​ mortgage term.
With level term life assurance the​ amount that is​ paid out on​ death remains the​ same. This is​ suitable for an interest only mortgage where the​ amount of​ outstanding capital owed does not decrease over the​ period of​ the​ mortgage.
Critical illness cover is​ a​ common additional benefit that can be added to​ a​ life assurance policy. the​ sum assured is​ payable on​ the​ conclusive diagnosis of​ a​ critical illness,​ such as
Cancer
Heart attack
Multiple sclerosis
Stroke.
It is​ wise to​ check what exactly is​ covered if​ taking out this option,​ as​ this can vary greatly between different providers.




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