Why would I need mortgage life insurance? | Insurance

By ChrisClare
Total views: 3
Word Count: 659

You might be thinking, "I have life insurance already. So why on earth do I need to consider mortgage life insurance?"

Mortgage life insurance can help insure your family's financial situation by paying off the remaining balance of mortgage should you die before the end of your policy's term. Should you have a repayment mortgage then the level of coverage you have will decrease in line with the level of the debt, so you are only paying for the appropriate level of cover from your life insurance that your current situation requires.

You can choose to buy your mortgage policy on either a joint or single life basis. When you initially start up the policy, you will be asked to specify the exact length of time it will be required to run, known as the term of the policy, as well as the total amount of coverage required at the beginning of the policy. It is also highly advisable to include critical illness cover as a factor of your policy, which will cost you a little bit more again.

Critical illness cover essentially provides a safety net should you die or become critically ill before your mortgage is paid off. The policy provider will pay the remainder of your mortgage should you die or become ill with any number of pre specified diseases which render you unable to work.

The mortgage life insurance policy ends when the specified sum is paid out as a benefit. If you are lucky enough to survive the entire term of the policy, and the amount that has been insured has not been made payable through a loss, the plan then terminates and nothing is paid out.

The policy has no cash value at the end of its term. This also means that if you select a policy good for the entire term of the mortgage, the loan has been paid off as well so you do not need that coverage any longer. If you are in the midst of replacing a policy which is currently in force, make sure that you do not cancel your current mortgage life insurance policy until you have concrete proof that the new policy is in force. This seems like a pretty simple thought, but should you cancel your current policy and, for whatever reason not be approved for the new policy, you might find yourself uninsured and uninsurable.

Your policy can run anywhere from one to forty years. You may choose to run the policy for the same length of time as the mortgage itself. It is really down to your own financial restrictions. You can have full coverage for the whole term or for just a part of it, it is entirely up to your own personal circumstances.

It should also be taken into account that many of the companies which deal with mortgage life insurance policies will also be more than willing to increase the amount of coverage depending on your individual needs and situation. You might need to take out a loan for the like of, say, home improvements. The amount of money borrowed will need to be covered. Or say when you originally purchased your policy you were single but are now married. In certain situations it will be in your own best interests to get your policy re-evaluated.

There are many well-written, web-based areas that you can find via an Internet search, which will help guide, you through your search for the proper cover and the right life insurance company that will provide your policy.

So to summarise you should always ensure that you have a life insurance policy to cover your mortgage. You should seriously asses whether or not you could benefit from critical illness cover, and you should make sure that any cover is at least for the amount of your mortgage and for the same if not a longer term than the mortgage loan itself. All these things can be clearly explained by a competent life insurance broker.

About the Author

Get what you need from your life cover plan use the experts for no obligation realtime discounted quotes for life insurance cover

You are here Articles > Finance > Insurance