There are a number of mortgage protection policy options, so it’s important to seek independent advice.
At Cailean, our mortgage advisers will work with you to understand your specific requirements before searching the whole market for the most suitable mortgage and mortgage protection insurance for you.
Term Insurance
The most basic type of life insurance is called term insurance. With term insurance, you choose the amount you want to be insured for and the period for which you want cover.
If you die within the term, the policy pays out to your beneficiaries. If you don't die during the term, the policy doesn't pay out and the premiums you've paid are not returned to you.
There are two main types of term insurance to consider – level-term and decreasing-term insurance.
A level-term life insurance
policy pays out a lump sum if you die within the specified term. The amount you're covered for remains level throughout the term – hence the name.
The monthly or annual premiums you pay usually stay the same too.
Level-term policies can be a good option to cover an interest-only mortgage that's not covered by an endowment policy or if you need a specified amount of cover for a certain length of time.
With a decreasing-term life insurance
policy, the amount you're covered for decreases over the term of the policy. These policies are often used to cover a debt that reduces over time, such as a repayment mortgages.
Premiums are usually significantly cheaper than for level-term cover as the amount insured reduces as time goes by.
Critical illness cover
It pays out a cash lump sum if you're diagnosed with one of a number of listed critical illnesses, including some types of cancer, a heart attack or stroke, multiple sclerosis or the loss of limbs.
A critical illness policy could be used to pay for medical treatment, cover adaptations to your home (such as mobility aids, special equipment or structural changes required due to a disability) or to pay off your mortgage. In fact, it can be used for anything.
The illnesses covered and those excluded from cover vary widely between insurers, so it's vital that you take independent advice before buying a policy and carefully check the policy documentation.
Pre-existing conditions tend to be excluded, but some insurers will base their cover on your personal medical history.