What are the options available to protect my mortgage?
Is life insurance the only way to insure my half of the mortgage would be paid in case of my death?
I work for an insurance company and we have what is called a creditor department. They deal with all credit protection policies ranging from business overdrafts and loan to mortgage protection policies with a range of cover, incl accident, sickness, unemployment and accidental death. These policies are usually taken out when the loan/mortgage etc is set up and it is done through the lender (banking branch if your lender is a bank). You should be able to contact your mortgage provider to see if they offer a mortgage protection policy. These policies are unlike life policies as they do not pay out a lump sum, instead they pay off your mortgage for the period you are off for up to a year.
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Ivan your answer is incredibly dangerous for people. People need to understand the risks involved, i.e. how would I pay my mortgage if I became sick. They also need to understand what products are available to protect them against such outcomes and the cost involved. They can then make an informed choice as to whether they want to purchase such products or not.
To categorically state that insurances such as critical illness protection and income protection is incredibly dangerous and irresponsible. I know people who have benefited from such policies when they have most needed them.
I would be interested to know what qualifies you to offer such advice and would you be willing to stand by it in the event that this person you are advising suffers a critical illness and cannot pay their mortgage?
To answer the question that was originally asked, if you want to pay your half of a mortgage in the event of you dying then yes you will need some sort of life assurance. You may find that you have some life insurance already, for example Death in Service benefit via your company pension.
If you don’t have this then you will need to purchase separate life insurance. It soun ds as if you have a joint mortgage so usually the most cost effective way of buying this is on a joint life first death basis. This means that you take one policy out jointly and then the policy pats out when the first og you dies. You can do separate policies but this is more expensive.
If your mortgage is a repayment mortgage then you will need a decreasing term policy, one where the insured amount reduces as your mortgage reduces. If you have interest only you will need level term, so the insured amount doesn’t reduce.
There are lots of other policies that you should seek information about i.e. critical illness protection and income protection and the best way to do so is to go and see your local Independant Financial Adviser who is properly qualified to advise and help you…..not like Ivan who is a cynic with no qualifications and who would not be prepared to stand by his advice.