Should I consider normal Life Insurance to cover my mortgage?

If you have an interest only mortgage you’ll need normal Life Insurance (also called level cover Life Insurance).
Most Mortgage Life Insurance policies include terminal illness cover at no extra cost.

Life Insurance pays a tax-free lump sum to you or your family if you die or fall terminally ill while the policy is in force.

If you are taking out Life Insurance in association with an interest only mortgage you’ll want insurance cover for the same amount as your mortgage.

You’ll also want the term of the insurance to match the term of the mortgage. Very few Insurance Companies will offer you a policy for less than 7 years. The most common length of time for a policy to be in force is 20 to 25 years. Many companies will not insure you beyond the age of 65 but a few will go to 70 and you’ll find that such cover is very expensive.

Most Life Insurance Policies include Terminal Insurance at no extra cost. That means that if you were diagnosed with an illness from which your doctor expected you to die within 12 months of diagnosis, the policy would pay out immediately rather than after your death.

You should be aware that Life Insurance Policies don’t have any investment value. Once the policy comes to the end of its term, that’s it. The policy is finished.

When taking out Life Insurance you should consider whether you need joint cover or single cover.

See the related questions below for more about these options.

If you want insurance to pay your monthly payments to your mortgage lender if you were off work through sickness, accident or unemployment, then you need Mortgage Payment Protection Insurance.

If you want insurance that will repay your outstanding mortgage if you became critically ill, you need Critical Illness Insurance.

Please note : The information contained within the FAQ section has been written by Mortgage Protected Online

Related questions:

What’s the difference between a joint policy and a single policy?

What’s the difference between Terminal Illness cover and Critical Illness cover?

Do I need level cover or decreasing cover?

Why would I want Mortgage Life Insurance?

What is Critical Illness Insurance?

What is Mortgage Payment Protection Insurance?

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