Mortgage life cover – protection for your family should the worst happen
Death is a tragedy whenever it occurs. However, it is particularly sad when it happens to people who have not lived a normal life span and especially when, as a result of that, their family suffer financial hardship as well as their normal emotional grief.
Mortgage life cover insurance, of the type provided by specialists such as Drewberry Mortgage Insurance, may help your family to cope should the worst happen to you.
The premature death of an income provider
If you have a mortgage, the chances are that you have to work hard to pay it.
If you were to die leaving a substantial mortgage debt behind you, you may need to be concerned about just what would happen to your family and the roof over their heads.
While lenders may be sympathetic and patient for a period, that is unlikely to be something that they will continue for a lengthy period of time. Government help may be extremely limited and your family may find themselves facing repossession sooner than you or they would wish.
All that might be avoided if you have life cover of a type set up to pay off your mortgage debt in the event of your death.
Two forms of policy
If you die within the terms defined by the policy, a lump sum settlement will be made to pay off your mortgage.
Policies providing that type of benefit typically fall into one of two categories:
- level term policies;
- decreasing term policies.
Level term policies will pay out the same capital lump sum at whatever point in the lifecycle of your mortgage your death occurs.
Decreasing term policies are linked to capital and interest repayment mortgages, whereby the debt on your mortgage reduces as each year passes. That means that the sum payable by the policy can also decrease each year, as you get through the term of your mortgage.
As a general principle, decreasing term policies may be more cost-attractive than level term ones.
Variations in benefit
Other things may rob you of your ability to continue to pay your mortgage including critical illness.
Some policies might pay out in the event that you were diagnosed with one of a specified number of critical illnesses. Other variations might include paying out if, for example, a medical practitioner diagnoses you as having a terminal illness.
Do you need such cover?
Of course, only you can ultimately decide whether or not having a policy of this type would be advantageous to you and your family.
Yet the thought of our successors needing to try and cope with the debts we leave behind is rarely a pleasant one. Given the fundamental nature of needing to be sure that your family has a home, this type of policy might be seen to be almost essential.
It might be something worth thinking about further.