About Mortgage Protection

 

Mortgage protection (or decreasing insurance) is in essence a policy that will pay the outstanding sum on your mortgage should you die, or if included on the policy, suffer a critical illness.

There are other ways of protecting your mortgage payments which you can consider. For example Income Protection or family income benefit but these are not generally called Mortgage protection insurance.

Basically there are two types:

A) Will pay out a lump sum equivalent to the outstanding amount on your mortgage should you die.

B) Will pay out a lump sum equivalent to the outstanding amount on your mortgage should you die or be diagnosed with a critical illness.

NB. These policies should not be considered if your mortgage payments are interest only.

Where, to whom and what will be the tax implications in the event of the policy paying out is an entirely different subject. We will be happy to advise you on this subject as regards your particular circumstances and the benefits of placing life policies in trust.

If you suffer from any serious health problems or have a hazardous occupation etc you should seek good independent advice before placing a policy. In these cases different companies take very different attitudes to setting premiums. This is where The Health Insurance Shop can provide you with the expert advice you require.

GUARANTEED PREMIUMS. This is where the premium is set at the outset and will not rise at any time during the life of the policy.

REVIEWABLE PREMIUMS (Type A). This is where the premiums are set for a period of time, Usually 5 years. You pay this premium for the first 5 years and in the 6th year you will be told of any increase. It will happen again in the 11th year of the policy and so on every 5 years until the policy expires. These premiums are usually lower in the first periods.

REVIEWABLE PREMIUMS (Type B). This has been introduced recently by one Insurance company. It is where you pay the premium asked for the first 12 months and they then review it each 12 months (rather like car insurance policies).