Life Cover
Life cover makes sure that the mortgage
is repaid in full if you were to die during the term of your
mortgage. It means that the people you care about aren't left
with a home to pay for when you are no longer around. Worse
still, they won't have to worry about losing their home you
have worked so hard to buy. It is hard enough losing someone
special to them, without losing their home too.
The cover can be arranged on a level
or a decreasing basis, for different reasons as described
below.
Level cover means that the sum assured
remains the same throughout the term of the policy. For example,
if you had a plan for £100,000 over a 25 year term,
it would pay out £100,000 if a claim was made in year
1 or in year 25. Level cover is usually used for family protection
rather than covering a mortgage, but there are some types
of mortgages it is suitable for, including interest only mortgages.
Decreasing cover is more commonly used
to cover a repayment mortgage, as it is designed so that the
level of cover decreases in line with the balance outstanding
on the mortgage. It will repay the mortgage balance at any
time during the mortgage term, provided that the mortgage
payments have always been met. The policy will not pay out
anymore than the amount required to pay off the mortgage at
the time of the claim.
Often Terminal Illness cover is included
so that if you were diagnosed with only 12 months to live
then the sum assured would be paid out then rather than waiting
until you die.
Waiver of premium, or premium
protection, is also an important option, as this ensures that
for a small increase in the monthly premium, if you were unable
to work due to accident or illness after a certain period,
e.g. 6 months, the premiums pay for themselves. This means
that you are not in the position where you have to cancel
valuable cover when you may need it the most, just because
you can't afford the premiums.
For the protection products mentioned
within this page we usually offer products from a selected
panel of providers.
Your home may be repossessed
if you do not keep up repayments on your mortgage.
Details
of our fees can be found here.
The FSA does not regulate Commercial
Mortgages or some forms of Buy to Let Mortgages.
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