Mortgage Life Insurance

Mortgage Insurance


Mortgage life insurance has one clear objective – it pays out a cash sum to help pay off your mortgage if you die during the policy term. So your loved ones could continue to live in the family home without worrying about the mortgage. There are two types of cover:-
Mortgage Decreasing Term Assurance
Mortgage Decreasing Term Assurance (MDLA) is designed to help protect a repayment mortgage, so the amount of cover reduces roughly in line with your remaining mortgage, and therefore the potential payout decreases over time. This type of cover is normally required by mortgage providers as a condition of a mortgage agreement.
Mortgage Level Term Assurance
Mortgage Level Term Assurance is designed to help pay off your mortgage if you die during the term of your policy. If you have an interest-only mortgage and you are only paying the interest on the capital borrowed, you are likely to require a level term life insurance policy.  With a level term insurance policy you will get the same amount regardless of when during the term a claim is made, with usually enough to cover the outstanding mortgage debt assuming you have an appropriate sum insured. 
With either types of cover you can take out Mortgage Life Insurance on a single or joint life basis, with the cash sum being paid out on the first claim only. You choose the number of years the policy will be in place and the level of mortgage life cover your require at the outset of the policy. Critical Illness benefit can also be added to most mortgage life insurance policies for an increased premium. By adding Critical Illness benefit the policy will pay out either on death or the diagnosis of a specified critical illness, whichever occurs first.
As soon as the sum insured is paid out the mortgage life insurance policy ceases. If you survive the term and the sum insured has not become payable then the plan ceases and nothing is paid out as this product has no cash in value at any time. If you are replacing an existing policy please ensure you do not cancel your current arrangements until your new policy is in force.
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