Mortgage Insurance

Mortgage insurance: The essentials

Have you considered what would happen with your home and mortgage should you or the main breadwinner in your family became critically ill or even die? Although it is not a nice subject to talk about, it is vital that you give mortgage insurance, such as life insurance some serious thought and then take action to ensure that you have the right mortgage protection insurance in place, should the worst happen. Mortgage insurance gives you peace of mind, knowing that your mortgage and home will be protected for your family in your absence.

What are the main types of insurance available?

The main types of mortgage insurance to consider are life insurance, critical illness insurance, income protection and family income benefit.

Life Insurance

  • Covers against: Death
  • Benefit paid: Lump sum

Life insurance is also known as term insurance or life assurance. In the event of death, life insurance will provide a lump sum of money during the term of the policy which is tax free. This money can be used by your dependents however they choose.

Critical illness insurance

  • Covers against: Serious injury or serious illness
  • Benefit paid: Lump sum or regular income

With critical illness insurance, a tax free lump sum of cash is provided if you are diagnosed with a critical illness that is set out in a list of conditions covered each with its own definition or level of severity that must be reached in order to trigger a payable claim.

Income protection

  • Covers against: Illness or injury
  • Benefit paid: Regular income

In the event that you are unable to work due to illness or an accident, then this type of mortgage insurance pays out a regular monthly income to replace a proportion of your salary.

Family income benefit

  • Covers against: Death
  • Benefit paid: Regular income

This type of mortgage protection insurance pays out in the event of death, but unlike life insurance, it doesn't pay out a lump sum of money and instead pays a regular, tax-free income until the end of the policy term.

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