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What is Mortgage Life Insurance?

Mortgage life insurance is also called mortgage life assurance as it is designed to pay off your mortgage when you die. The amount insured reduces in line with the mortgage amount over time. The term of the insurance policy is normally the same as the length of your mortgage - 25 years is typical. Mortgage protection insurance is the life insurance that most people have.

Mortgage life insurance is a type of term life insurance as it lasts for a set number of years, known as the term. Whole of life assurance policies are open-ended and last for as long as you live. As a result they are more expensive than term life insurance policies. Term life insurance is normally used to cover either your mortgage, or to give your family money if you die.

Decreasing Term Life Insurance

Decreasing term life insurance works like mortgage protection assurance, but instead of the amount covered reducing in line with your mortgage each year, the amount the policy will pay out reduces by a fixed amount each year.

Do you need life insurance?

If you are single and don’t have any children, or anyone that depends on you financially then you don’t really need life insurance. You would be much better off using this money to buy an insurance policy that would give you an income if you were unable to work because of illness, for example, income protection insurance.

However if you have someone that depends on you financially, like a partner or children, then you need some life insurance to provide for them if you weren’t around to provide for them financially.

Should I switch an existing life insurance policy?

If you have an existing level term life insurance policy you should be able to shop around to save money. Over the last decade the cost of life insurance has fallen significantly. However, before cancelling your existing policy you should shop around to see if you could save money and find suitable cover. If you cancel your policy first you risk being left without cover. This is especially important if you bought the original policy many years ago and have had medical problems in the mean time. The potential savings by shopping around could be wiped out by increased premiums because you are older and your recent medical problems.

Is mortgage life insurance all I need?

You may think that if you have enough life insurance cover to pay off your mortgage if you die you are properly covered. However if you have a partner or children who depend on you financially would they be able to cope without your income? For most people as well as mortgage life they also need more cover for their family to live on. Also which you should consider is critical illness insurance as part of a life insurance policy. It is a must if you have dependants.

Things to consider when buying life insurance

  • Do some research and get advice to help you decide which is the right type of life insurance and the right policy
  • Make sure the life insurance policy is suitable for your needs
  • Check how much it costs and if there are any charges
  • Make sure you know what will happen if you miss a monthly premium and if you want to cancel the policy.

How to find the right mortgage life Insurance policy

Life insurance is complicated and it's essential that you choose the right policy. We specialise in life insurance and will search the market and help you find the right cover at the best price available. Our service for life insurance comparison is free and you are under no obligation.

Compare mortgage life insurance today!

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