Choosing the mortgage life cover that’s best for you
If you have a mortgage, it is important to make provisions to ensure that if anything happens to you, your family is not left with a big mortgage debt and the prospect of losing the family home. You can either do that by getting mortgage life insurance, another type of life insurance, as well as mortgage payment protection insurance. (Learn more about which product is best for protecting your mortgage.)
Now, if you have decided on getting mortgage life insurance policy, you should look into a few factors that will help you decide which kind of mortgage life insurance is best for you. Here are some of the things you should look into:
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Portability.
If the mortgage life insurance is sold by the lender or the mortgage company, it is locked with the mortgage company. If you decide to refinance, switch lenders or if the mortgage company sells the loan to another mortgage company, you will have to get a new mortgage life insurance and re-quality for it. There are some insurance products that allow for portability – this means that the plan will stay with you regardless of whether you refinance. This is if you get the cover on an individual basis.
- Buy from an insurance broker.
- Find overlaps with other covers. If you have life insurance from your employer, this can also help pay the mortgage off.
- Work with websites that offer discounts or competitive rates.
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Your future plans.
Do you already have a timetable in your mind as to how long you will be staying in the house? Do you have plans of moving somewhere else? Do you have the means to pay off your mortgage early? If you answer yes to any of these questions, a short mortgage life insurance period may be the right option for you.
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Current age.
For those who only have a few years left before you reach retirement age, a short mortgage life insurance period is also advisable, as the cover is only allowed up to a certain age.
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Your situation/needs.
If you are married, it may be helpful to consider getting the mortgage life insurance cover as a joint life policy. If you are concerned about a more comprehensive cover, you might think about getting Mortgage Payment Protection Insurance or other riders.
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Type of mortgage.
If you have an interest only mortgage, where you’re only paying for the interest (with the principal payable at the end of the mortgage period), then a level term mortgage life insurance is the most advisable. If you are paying off the principal with every mortgage payment you make, then a decreasing term mortgage life insurance is best.
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Length of mortgage period.
Of course, this should be considered in your choice of mortgage life insurance plan. You will want to match the length of your plan to the length of your mortgage, although there are others who opt to get a plan that has a shorter period that the mortgage, since they plan to pay off the mortgage earlier.
Quick tips to save on your mortgage life insurance:
Latest update: 17.06.2013
Get your mortgage life insurance quote now, fill our form on the right.
Other sites: critical illness cover, lifeassurance.org.