Mortgage Life Insurance What You Need to Know….

There are many things to consider when choosing a life insurance plan.

If you have dependents that rely on your income and a mortgage finances the home in which you live, making plans for the future is imperative for making sure your loved ones are cared for.

One way to start planning for the future with these circumstances is to consider purchasing a Mortgage Life Insurance Cover plan. Claybrooke Life Insurance can help you determine if this type of policy is right for you.

What is Mortgage Life Insurance Cover?

Mortgage Life Insurance Cover is not a standalone product – this type of coverage is a version of life insurance. This coverage pays out in the event of the holders passing and grants beneficiaries enough funds to clear any outstanding mortgage debts. In some cases, the payout will cover the remaining cost of the mortgage with money to spare.

The product comes in three main forms: Decreasing Term, Level Term, and Whole of Life:

Decreasing Term

Decreasing Term Mortgage Life Insurance Cover is insured for approximately the same amount as any outstanding mortgage debts. Because of this, as the amount owed on the mortgage decreases, so will the amount insured by the life insurance policy throughout the plans term, which is generally 25 years.



An important note, however, is that Decreasing Term Mortgage Life Insurance Cover is best suited for holders who have repayment plan mortgages where the capital and interest decreases over time.

Level Term

Level Term Mortgage Life Insurance Cover is exactly what it seems – the amount insured to the policy holder remains fixed throughout the policy’s term. For example, if the policy is insured for £200,000 that is what will be paid out whether the policy is claimed in during the first year or twenty-fifth year of the policy.

The idea of this kind of  cover is that it will create a surplus of funds above the amount of the mortgage debt over time. Even though premiums for this coverage are fixed, they tend to be more expensive.

Whole of Life

Mortgage Life Insurance also has the option of being taken out as a Whole of Life Insurance policy, which will pay out to beneficiaries regardless of when the holder passes away. The premiums for this coverage are linked to other funds, such as endowments or pensions, and tend to be more expensive than both Decreasing Term and Level Term policies.

Another important aspect to take into consideration is that if the investments tied to the Whole of Life policy do not mature, premiums may increase.

Video Overview

Additional Benefits of Mortgage Life Insurance Cover

Once you have decided on purchasing and chosen which type of policy is right for your unique situation, there are some additional benefits that can be added to the policy, such as critical illness cover.

This coverage pays out if the holder develops a critical illness which can range from a heart attack to long-term illnesses. When this coverage is combined with Mortgage Life Insurance, the payout will only occur once depending on which event happens first, passing away or a critical illness.

How Are The Quotes Calculated?

Mortgage Life Insurance Cover is calculated based on the likelihood of when the policy holder will pass away. Factors such as your age, gender, overall health, and some lifestyle factors, such as smoking, will be considered when quoting premiums and the total amount assured by the policy.

Also, the type of policy that is chosen, Decreasing Term, Level Term or Whole of Life, will also play a role in the amount of monthly premiums and how they will change over time.

When it is time to purchase life insurance, there are many things to take into account. If paying an outstanding mortgage is a concern, Mortgage Life Insurance Cover may be a great option. You can always research different types of policies, but it is important to make sure to choose a policy that provides the coverage you and your family needs.

If you need more information, contact us and our knowledgeable consultants can help you choose a policy that is perfect for you.