What is mortgage protection?
Mortgage Protection Insurance is designed to cover the cost of your remaining mortgage balance if the unexpected happens. Mortgage protection is usually a decreasing term policy because the amount of cover reduces in line with the balance of your mortgage as you make monthly payments.
In the event of the death of a policyholder, a cash lump sum is paid out equivalent to the mortgage balance to ensure your loved ones can live mortgage-free. Generally, payments are slightly cheaper than level term cover to reflect the reduced risk.
Do I need mortgage protection?
Mortgage life insurance can be useful if you have dependents, perhaps your family, living in the home you bought with the mortgage. As mortgages are major financial commitments, if you die and your family falls behind on payments, they could end up with their home repossessed.
However, with mortgage life insurance you can ensure that your family is able to keep up with the repayments and live in the home.
It may not be necessary if you don’t have any dependents, or anyone else living in your home, as no-one else will need to continue making the mortgage repayments.