Mortgage protection Insurance (which should not be confused with Mortgage Payment Protection Insurance, which is cover that will carry on making your mortgage payments in the event of a non-fatal loss of income) is a policy whereby whatever sum remains owing on a mortgage is paid off in full in the event of death.
If a joint mortgage is held, it is usual to have a joint life insurance policy. If one of the policyholders dies, the mortgage remainder is settled and the policy will then be terminated, as there would no longer be a requirement to cover the other party. It is usually a condition of a mortgage to ensure that life insurance for mortgage holders is in place.
Mortgage protection insurance is life insurance of the type called “decreasing term” – which means that the length of the policy coincides with the length of time that remains on the mortgage, and that the amount of cover decreases with the amount left owing on the mortgage as it gets paid off over it’s duration.
The mortgage lender will usually be paid a lump sum by the insurance company in the event of the death of the insured, although sometimes it may be paid to the executor of the insured’s estate.
It is, of course, of the utmost importance to ensure that your insurance cover is correct. Our friendly advisers can help to assist you through the process of obtaining the right insurance, and make sure that you get the best possible deal. Please don’t hesitate to contact us today.