Save your property and more with mortgage protection insurance
Taking out a mortgage in itself is a scary enough prospect. Many people are not able to buy their first property until they are in their thirties, with rising house prices and the tightening of lenders’ belts making it increasingly difficult to secure a mortgage. But what happens if one of the household’s breadwinners dies? Will it be possible to maintain the mortgage repayments?
The above scenario is the precise purpose of mortgage protection insurance (MPI), to protect the remaining partner and ensure they can continue to live in the home. The premise behind mortgage protection insurance is simple. A premium is paid from the time the mortgage draws down. Over the years the amount paid upon death, or the ‘death benefit’, will decrease in line with the mortgage’s balance.
Mortgage protection insurance is a form of life insurance which protects the loan in the event of demise or diagnosis of serious illness throughout the term of the mortgage.. The policy is assigned to the lender who becomes the beneficiary of the ‘death benefit’ in the event of death before the mortgage is repaid in full.
The amount individuals can expect to pay for life insurance differs from case to case, based on factors such as age, whether they smoke and the principal amount of the mortgage.
It is also possible to purchase mortgage protection insurance which provides joint coverage for both partners in the relationship. This ensures the ‘death benefit’ is paid when either one dies. The premium for joint coverage may be lower than the cost of two separate term life insurance policies.