Insurance for Life

A full life insurance policy, usually known as a whole of life policy, is not needed to cover your mortgage debt when you are buying your own home. A cheaper and more suitable policy to cover your mortgage is a term insurance policy.

No matter how you look at it, buying a home is expensive and especially if you are a first time buyer getting onto the property ladder. It makes a great deal of sense to balance your budget at a time of great financial strain and term insurance is a great deal cheaper than whole of life insurance policies.

Many homebuyers already have an existing life insurance policy that can be used to supplement the cover required to ensure the mortgage can be repaid upon death. It is generally considered to be good advice if you arrange for a separate policy to cover the cost of the entire mortgage debt in addition to any protection that has been set up to ensure sufficient funds available to handle living expenses for your dependants after you have gone.

This need to protect not only day to day living costs and any other incidentals as well as ensuring paying off loans and mortgages is a crucial but often overlooked point in arranging your financial protection. All too often, inadequate financial protection to cover especially a mortgage, results in a home being sold simply because it cannot be run on a viable financial basis given the drop in income that is experienced after the death of a bread winner.

Another feature of term life insurance policies that is peculiar to mortgage insurance cover is the decreasing level of insurance cover that is provided by the insurance policy. As the mortgage is repaid, so the debt decreases and the need for life insurance also declines. This decrease in life cover over time makes such policies even cheaper than non-mortgage insurance policies as the risk to the insurance provider is reduced.

You do need to check to make sure that any decreasing mortgage term assurance policy will always cover any outstanding mortgage throughout the life of the mortgage. You also need to be aware that if you increase the mortgage or alter the term of the loan, that you review your insurance arrangements to make sure they are still going to provide proper financial protection for your loved ones.

Mortgage decreasing term assurance is extremely cheap to buy and arrange. In terms of your overall housing costs, it will be a very small fraction of the monthly mortgage payment, and by a small fraction we are talking of rates starting from pennies a day. Obviously, the older you are, whether you smoke or not, how long the term is and of course, how much cover you require will all determine the total cost of the policy.

Death and dying are clearly not after dinner conversation topics that we look forward to having. Dealing with insurance and ensuring our loved ones benefit from financial protection is a gift of love to your family and dependants more than any other you can provide. Making sure your family can continue to enjoy the home you have worked hard for long after you have gone will help them come to terms with their loss and enhance their own lives immensely by maintaining family unity and stability. Do not let the topic put you off – just get it done and protect your home and your family.