There are two main types of mortgage protection insurance. The first is a plan that will finish paying your mortgage upon your death. The second kind is coverage for if you become unemployed for certain reasons. This insurance will then cover your mortgage until you are able to go back to work or find other employment.
One mortgage protection plan will provide an amount of cash to pay the remainder of your mortgage, if interest rates are kept below certain limits, in the event that the insured should die before the mortgage is paid off. This means that your family would be able to keep your home, instead of losing it to the bank or having to sell. This insurance is only payable upon the mortgage protection insurance owner?s death, and there is no surrender value. This means that if you pay off your mortgage before you die, you receive no money.
Average mortgages in the UK are over £100,000, being paid back over a large amount of time, usually around 25 years. If you take out mortgage protection insurance for the value of your house, note that your premiums will decrease over time due to the house becoming more paid off. For example, if you take out a mortgage for £200,000, by the end of the year, you may only have ₤195,000 left to pay. Which means that your premiums would go down because the amount of insurance needed has decreased. For this reason, this type of insurance is also sometimes known as decreasing term insurance.
Another type of mortgage protection insurance is coverage for if you cannot work due to illness or the involuntary loss of your job. Many times, this kind of mortgage insurance can cover payments for up to 12 months if you cannot work due to an illness, injury, or involuntary unemployment. Often, this mortgage insurance is more financially viable for a younger person, because his or her chance of falling ill is less and his or her likelihood of finding another job is higher. In short, then, the main factors in the price of this insurance are the cost of the home and the age of the insured.
To begin the search for the right mortgage insurance for you, fill out our short mortgage protection form below and we will put you in touch with a qualified adviser from the SimplyFinance network who will contact you to discuss the plan that best fits your needs.