Mortgage Life Insurance – What You Need To Know

Dying is not something people like to dwell on. But without proper mortgage life insurance, how would your family keep a roof over their heads?

If the worst should happen to you, the mortgage would still need to be paid – or your familymay generally have to sell the family home to pay off the mortgage debt.

If you have mortgage life insurance in place, you may have peace of mind on this issue. After all, the insurance exists to step in and may pay off the outstanding mortgage balance if you should die during the remainder of the term of your mortgage.

How does it work?

Mortgage life cover may typically be taken out at the beginning of a mortgage – although if you do not have any yet, you may be able to purchase this cover at any stage.

If you take out this form of insurance you may be protected against the possibility of if:

• die; or
• are diagnosed with a terminal illness.

This kind of cover might also be called decreasing term life insurance. Tyically the amount of payout decreases along with the mortgage. Unlike a savings account or some other kinds of life insurance protection, your dependants may not receive a lump sum at the end of the term.

How much does it cost?

Companies may differ in how they put a price of their insurance. However, they may usually take the following issues into account:

• your age;
• the state of your health;
• your postcode;
• if you are a smoker;
• how much the mortgage is; and
• your occupation.

In case you were surprised by that last consideration, life assurance companies usually consider some jobs to be more risky and therefore more dangerous to your health than others.

Check the details!

Another thing you may wish to check is the application form and ensure that you answer all questions fully. Failure to disclose anything, particularly a pre-existing medical condition, can result in the insurer failing to pay out when your family needs the money.