Mortgages have been in the news again in the UK lately, and generally not for the right reasons. While the accelerating economic turmoil has led to a lot of important factors being overlooked, one thing that certainly does have to be borne in mind, is the risk of more people struggling to keep up with their mortgage repayments, and perhaps even seeing their home repossessed as a result.
A recent report in the Express has suggested that a combination of spiralling house prices, perilously high inflation, crippling energy bills and higher interest rates, could spell serious trouble for those trying to pay off a mortgage.
With all that in mind, there might have scarcely been a better time to look seriously at taking out a life insurance policy than right now, especially if there are other members of your household who would find it difficult to keep on paying the mortgage on your property in the event of your death.
Introducing life insurance, and how it can help protect your mortgage
As with other forms of protection cover, life insurance is designed to help protect against the financial consequences of the worst happening to you and your loved ones.
Specifically, a life insurance policy can pay out a one-off tax-free lump sum to your surviving loved ones, in the event of you - the policyholder - passing away during the policy term. That money, in turn, could help with various costs that your surviving relatives might have, including any payments that still need to be made on your mortgage.
In fact, there’s such a thing as decreasing term life insurance, which can be an especially suitable life insurance policy to take out as ‘protection’ for a mortgage. The way it works is that the policy’s payout value goes down over time as more and more repayments are made on the mortgage. This means that if you were to die relatively early into the policy term, your loved ones would receive more money than they would in the event of you passing away towards the end of the policy term.
Decreasing term life insurance is also often cheaper to purchase than other types of life insurance policy, so it could be an attractive option for controlling your costs in the ‘here and now’.
Other types of life insurance are available, however, that could also be of relevance to those paying off a mortgage. They include level term life insurance, which involves both the cost of premiums and the payout value staying the same throughout the policy term, as well as whole life insurance, which - as its name indicates - provides permanent cover. But of course, whole life insurance is also typically more expensive than term cover.
Do I strictly have to have life insurance for my mortgage?
There’s no law that states anyone who takes out a mortgage must have a life insurance policy; however, it may be a condition laid down by some lenders. In any case, you might come to an independent decision that a life insurance policy would be a wise investment for you during pressured economic times like the present, at least for as long as you have a mortgage.
Would you like to learn more about the possibilities for life insurance, and receive a competitive quote tailored to your needs? If so, it couldn’t be easier to call our free no-obligation phone line here at QuoteLifeCover.com today, on 0800 316 6917.