Over the past few years many forms of insurance policies have become more competitively priced, especially life insurance. If you have a life policy which is several years old you may be able to change your provider for a more competitive premium, or to increase the benefit for the same monthly cost. You should seek advice before cancelling any existing policies and ensure continuity of cover when making new arrangements. Click on the links below to view our helpful advice guides that will let you find out how you can protect either you and your family, your mortgage, or your business.
What Is Mortgage Life Assurance?
Mortgage Life Assurance is designed to pay off the remaining mortgage debt on repayment mortgages if you die within a set period. It helps to ensure that your dependents needn’t worry about repaying the mortgage if you die.
Is it worth having?
It is sensible to consider cover when you take out a mortgage. It can be useful protection if you have a repayment mortgage and people who are financial dependent on you. It should be remembered that Mortgage Life Assurance does decrease in line with the mortgage debt therefore should you wish to maintain a certain level of life assurance then Level Term Assurance may be more appropriate for you.
How Much Does It Cost?
Mortgage Life Insurance has no investment element as the payment covers the balance of the mortgage. So it’s usually a simple case of the cheaper the better.
Costs depend on you
Policy costs increase with mortgage size and length as well as the likelihood of your death during the term. This means age and whether you smoke are big factors. For those who’ve quit smoking, once you’re clean for a year, it is worth a re-quote as the price may have reduced substantially.
Again if you already have a policy and you have stopped smoking ask us for a re-quote as we may be able to find cheaper cover for you. Some Mortgage Life Insurance policies also factor in health, occupation and participation in risky sports. So a 21 year old, non smoking office worker, who enjoys healthy food and regularly visits the gym, will probably find their policy could have monthly premiums that costs less than they would for someone who is older and leads a less healthy lifestyle.
Consider writing in trust
If you die the life assurance payment will then form part of your estate. This may make the value of your estate liable to Inheritance Tax. In many cases you can avoid this by writing the policy in trust – which means the payment goes direct to your dependents, avoiding inheritance tax. This is relatively easy to do as with most insurance policies they include the option (and papers) for writing in trust directly, at no extra charge.
These types of plan will have no cash in value at any time, and will cease at the end of the term. If premiums are not maintained, then cover will lapse.
Inheritance tax planning and trusts are not regulated by the Financial Conduct Authority.
Your home may be repossessed if you do not keep up repayments on your mortgage.