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Mortgage Life Insurance is also known as Mortgage Payment
Insurance.
Mortgage Life Insurance ensures that the outstanding capital
on your repayment mortgage is repaid if you died. You insure
yourself for exactly the same number of years as remain on
your repayment mortgage. Then, if you die
during the policy’s term, your insurance company sends
the proceeds of the policy direct to your mortgage lender.
(See below if you have an interest only mortgage.)
With Mortgage Life Insurance the initial sum you insure for
should equal the outstanding capital on your mortgage when
you take out the insurance. Then the insured sum reduces from
your initial sum, down to nil immediately before the policy
comes to the end of its term. So, for example, if you died
three quarters the way through the policy’s term, the
policy would pay out three quarters of the initial sum insured.
If you have an interest only mortgage, the
capital sum outstanding to the mortgage provider stays constant.
In this circumstance you need standard Life Insurance that
provides level cover. (For further information about standard
Life Insurance click here: What
does Life Insurance do?)
By following these guidelines the value of your insurance
cover should equal the sum you owe your mortgage lender.
Mortgage Life Insurance is, as you may expect, much cheaper
than standard Life Insurance that provides Level cover.
If you are looking for insurance that pays your monthly
mortgage repayments if you were ill or unemployed (rather
than a lump sum to totally repay your mortgage), then you
need Mortgage Payment Protection Insurance.
(For information about Mortgage Payment Protection Insurance
click here: What
does Mortgage Payment Protection Insurance do?)
Here’s another tip: Avoid purchasing your Mortgage
Life Insurance through your Bank or Mortgage Lender. They
will almost certainly charge you full list price for your
insurance and will work out very expensive in comparison to the cheapest deals.
life insurance. Consider taking out a debt management plan if you are facing problems with mounting debt
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