One of the most common questions asked when talking about mortgage protection …. what is it? In simple terms mortgage protection is a type of insurance that is used to cover you in some circumstances in which you can no longer meet your mortgage repayments. For example, if you or your partner pass away before your mortgage is fully repaid the insurance pays off the remainder of the mortgage.
Why do you need it? Well if you have a family its unbearable to imagine the pain they will feel if the worst happened, add to that financial worries and potentially losing their home at the very worst time. Not only would the stress of the home loss be devastating but they may also lose valuable memories with you in that home, somewhere that would be needed more than ever at that point. By purchasing mortgage protection, you are safeguarding your family’s future knowing they would be financially secure and had one less worry at a such life changing time.
How long am I covered for?
Cover typically lasts for the length of your mortgage and is generally less expensive than say life insurance because as time goes on and you have paid some of your mortgage off, the cost of any potential claim falls, so there is less risk compared to life insurance when the risk of a claim increases.
The other option would be a fixed amount or a level term policy this is when the level of protection and pay out stays the same throughout the policy but still giving you peace of mind your family would be supported financially.
How do I get cover?
Many companies may offer mortgage protection but if you visit LifeSearch, you will find everything you need to ensure you get the cover that’s suitable for you and your family
Do I have to pay out for it seems like an extra expense? In short no, you don’t have to buy it and in some circumstances its almost unnecessary, one such situation would be if you lived alone, if you are the only person who has any responsibility to pay off the mortgage and had no one depending on you to keep the roof above their head.
In this situation it would not really matter as your property would be sold via probate with the mortgage amount simply coming off the sale price. However, if you live with somebody else or have children in the home it is completely recommended. It makes sense to do everything in your power to secure their future. In this situation a monthly premium really does not seem that much to pay for peace of mind and security for your family.
I have life insurance, why do I need this as well?
As explained earlier mortgages protection is there to cover your mortgage in the event that something happens to the main earner in the household, and it does just that, pays the mortgage. Life insurance however is a pay-out amount that could be used towards anything the benefiter wanted, For example to pay funeral costs or school fees. They are both quite different things and just because you have life insurance you should think carefully about the amount that would be paid.
You should ask yourself some realistic questions, would this really be enough to support your family if they had to pay the rest of the mortgage out of the settlement? Can they cover the mortgage payments until the insurance is paid out? What other financial support would you family need? With so many things to think about its fair to say the most sensible option would be to have both, by getting mortgage protection supported by life insurance you are protecting you family in the best way you can whilst covering all eventualities.
In conclusion nothing can replace you or your partner, no amount of money will make up that loss to your family. Putting in precautionary measures to protect your home and finances is probably one of the only things that you can do to comfort those closest to you at this time. By getting mortgage protection in place your family will have space and time to grieve without any added pressure, we all want what’s best for our loved ones and this is a gift you can put in place to support them even at the worst times.