Decreasing Mortgage cover
What is Decreasing Mortgage cover?
Decreasing term mortgage life insurance provides a cash lump sum for your loved ones to pay off any outstanding repayment left on your mortgage should the worst happen.
With decreasing term insurance the level of cover declines over time with the amount remaining on your mortgage. This means that as the amount of cover falls each year with decreasing term insurance there is a reducing amount of risk for the insurer, therefore premiums are far lower than for a level term plan.
The alternative to decreasing mortgage life insurance is level term insurance, which provides a fixed level of cover and is designed for interest only home loans.
What does it cover?
- Death: If you pass away within the term of the policy this type of cover would payout a lump-sum that can be used repay the remaining about left on the mortgage
- Terminal illness: Leading life assurance policies can also payout early if you are diagnosed with less than 12 months to live by a medical practitioner.
- Critical illness: This option also enables the plan to payout if you were to suffer any one of around 35 to 40 conditions are usually named in the policies terms.
How does it work?
Step 1: You pass away during the policy term (set equal to your mortgage length).
Stage 2: Your family make a claim with the insurer (including your death certificate for verification).
Stage 3: The insurer pays the sum assured either into trust or directly to a joint policyholder.
Stage 4: Those life insurance funds can then be used to repay the mortgage loan in full.
Do I need it?
Although mortgage life assurance is not compulsory it is worth considering this plan if your family would struggle to keep up with the loan repayments if you passed away. So what choices do you have when it comes to this type of cover?
1. Choose your level of cover
This is usually set equal to the amount of debt still outstanding on the mortgage so the loan can be cleared in full should you pass away.
2. Choose your length of cover
This is often set equal to the length of time the loan has left to run so repayment can be made if you die at any point during the mortgage.
3. Include critical illness cover
This is an option that can be added to your life insurance policy so the mortgage can be repaid should you suffer a critical illness condition.
What will we do?
Although thinking about what could happen in the event of death is something that we all hate doing, we at Niche would like to give you peace of mind that all of your worries and concerns will be covered.
If you contact us you will be put straight through to our experienced team, who will help you along every step of the way. We will go through all of the options and make sure that you are fully covered and have the best deal that we can provide for you.