Mortgage Protection Insurance
Mortgage protection insurance helps protect your loved ones and your home in case something happens to you. We help homeowners across Bicester and Oxfordshire put the right cover in place.
Mortgage protection insurance is different from homeowner’s insurance.
Mortgage protection covers the monthly financial commitment of a mortgage.
Mortgage protection insurance is different from buildings insurance, which covers the structure of the property. Mortgage protection covers the financial commitment that lets your family stay in it.
Your mortgage is probably your biggest monthly commitment. If something unexpected happens to you, mortgage protection insurance means your family won’t face the prospect of losing their home on top of everything else they are dealing with.
When you take out a mortgage, you’re committing to payments that could run for 25 years or more. Mortgage protection insurance steps in if you can no longer make those payments, either by covering your monthly mortgage costs or paying off the outstanding balance entirely, depending on the policy you choose.
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Coverage for the mortgage
Coverage for the mortgage
When you take out a mortgage protection policy, you pay a monthly premium and in return, the insurer pays out if a specified event occurs such as your death, a critical illness diagnosis, or loss of income, depending on the cover you choose. The payout either clears the outstanding mortgage balance or covers your monthly payments until you can return to work. Every mortgage is different, and so is every household behind it. The right combination of cover depends on how your mortgage is structured, who depends on your income, and what protection you already have in place.
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Temporary Coverage
Temporary Coverage
Mortgage protection insurance runs for a fixed term, aligned to the length of your mortgage. It is designed to pay off the outstanding balance or cover your payments if you die or meet specific criteria during that term. Once the mortgage is repaid, the policy ends – which is why premiums are generally lower than whole-of-life cover. You are paying for protection during the years you need it most, not indefinitely.
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Premiums
Premiums
Like any insurance, you will need to pay regular premiums to maintain your cover. These are based on factors including your age, health, and the amount of cover required. Premiums can be arranged on a guaranteed or reviewable basis. Guaranteed premiums stay fixed for the life of the policy, giving you certainty over costs. Reviewable premiums are typically lower at the outset but are reassessed periodically, usually every five years, and may increase on review. Over the full term, guaranteed premiums often work out better value.
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Peace of Mind
Peace of Mind
Mortgage protection insurance means that if something unexpected happens to you, your family won't face the prospect of losing their home on top of everything else they are dealing with. That security is difficult to put a price on. For most people, knowing the mortgage is covered regardless of what happens is one of the most valuable things a policy can provide.
Book a telephone appointment
Our advisers will chat to you about your requirements, take a look at your existing cover, and your personal circumstances, and recommend the most suitable way to protect your home and your family.
Our consultation is free with no obligation.
It helps to have a rough idea of your outstanding mortgage balance and how long is left on your term. Everything else we can work through together on the call.
Types of mortgage protection insurance available
This plan is taken out in one person’s name. For policies providing life cover only the sum assured will be paid out in the event that person dies. Critical illness cover could also be included.
This plan is taken out in joint names. For policies providing life cover only the sum assured will be paid out when the first person dies. If the policy provides life or critical illness benefit the policy will pay out when the first person suffers the earlier of a specified critical illness or death.
This plan is taken out in joint names. For policies providing life cover only the sum assured will be paid out when the second person dies. If the policy provides life or critical illness benefit the policy will pay out when the second person suffers the earlier of a specified critical illness or death.
The plan is taken out in joint names, but within the joint plan there will be a separate policy for each life assured. This means the plan will pay out separately on the death (and/or critical illness as appropriate) of each life assured. This option offers flexibility in that a different sum assured can be chosen for each person.
The plan is taken out by one person (a) on the life of another person (b). For policies providing life cover only the sum assured will be paid to (a) on the death of (b). For this policy to be taken out there must be insurable interest between the two parties.
Premiums can be on either a guaranteed or reviewable basis. If they are on a guaranteed basis the premiums will remain the same throughout the term. If they are on a reviewable basis the premiums will be reviewed after a certain time (usually 5 years) at which point the premium could rise.
The premium at outset tends to be lower under the reviewable option, however these could rise to above the guaranteed premium rate on review. For life insurance, critical illness insurance, income protection and unemployment cover we offer products from a range of providers. We can arrange protection insurances for you even if you have not arranged your mortgage with us.
A level term assurance plan is designed to provide you with life cover for a specified period of time, should you die within the term of the policy the plan will pay a tax-free lump sum. There is no investment element, so if the plan comes to an end, for example, if premiums cease, there will be no value to the policy. The level of life cover will remain the same throughout the term of the contract. This type of policy is normally suited to an interest-only mortgage.
A decreasing term assurance plan is designed to provide you with life cover for a specified period of time, should you die within the term of the policy the plan will pay a tax-free lump sum. There is no investment element, so if the plan comes to an end, for example, if premiums cease there will be no value to the policy. The level of life cover will decrease at a set rate over the term of the policy. This type of policy is normally suited to a repayment mortgage.
A family income benefit policy is designed to provide you with life cover for a specified period of time. Should you die within the term of the policy the plan will pay a tax-free regular income rather than a lump sum. Payments will be made between the date of death and the end of the term, when the policy will come to an end. Premiums tend to be cheaper due to this potentially restricted payment time. There is no investment element, so if the plan comes to an end, for example, if premiums cease there will be no value to the policy.
Income protection is designed to pay out a weekly or monthly sum to you in the event of an accident or sickness, this is calculated on your earned income. These payments are designed to cover your mortgage payments.
Unemployment protection will pay out a monthly sum to you if you are made redundant.
This plan will pay out the sum assured on diagnosis of certain types of critical illness, e.g. heart attack, stroke and cancer. Providers will have a definition for each illness and most follow the Association of British Insurers (ABI) definitions. Critical illness cover can be on a stand-alone basis, or can be combined with life cover. Where it is combined the critical illness payment can be either instead of, or in addition to a payment upon death.
Life policies can be placed in trust so that the proceeds from the policy will not fall into your estate. This can be beneficial for inheritance tax planning. The following is a brief description of the main types of trust that could be used:
- Absolute trust – under an absolute trust the beneficiaries are fixed at the outset and cannot be changed
- Flexible trust – under a flexible trust the beneficiaries can be changed should this be required
- Split capital trust – under a split trust any critical illness or terminal illness benefit would be payable to the policyholder while any death benefit would be payable to the trustees to hold on trust for the beneficiaries.
Mortgage lenders will not allow a purchase or remortgage to complete without having adequate buildings insurance in place. We can arrange your buildings and contents insurance for you, using a range of product providers.