Why protection matters
Always compare a wide range of life insurance policies to ensure you find the best possible deal to suit your needs
What is life insurance?
Mortgage life insurance
Policy extras
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If you have dependents that rely on your income to cover bills such as the mortgage and other outgoings, it pays to think about how they would cope if you were no longer here.
Although none of us likes to think about dying, death is a possibility for any of us at any stage of our life, so it’s important to ensure your loved ones will be financially secure if you suddenly aren’t around to provide for them.
In return for monthly premiums, life insurance will pay out a lump sum when you die, offering peace of mind that your family won’t be left with money worries at what is already likely to be an upsetting time.
You can either take out a policy that will cover your mortgage alone, or you can buy cover which will provide your family with a lump sum that can pay off your home loan and leave them with money to spare for other debts and ongoing living expenses.
Here, we look at the differences between life insurance and mortgage life insurance to help you decide which kind of cover might be right for you.
Life insurance is designed to pay out a lump sum in the event that you die unexpectedly. Some policies enable beneficiaries to receive monthly payments instead of a lump sum.
One of the most common kinds of life insurance is called ‘term’ insurance. This type of policy runs for a set term, perhaps 20 or 25 years and, in return for fixed monthly premiums, will pay out if you die during this period.
If you don’t die during the policy’s term, you simply stop paying the premiums when the term ends, and the cover will lapse.
Another option is ‘whole of life’ cover. This sort of policy will cover you for your whole life rather than a set term and, as a result, premiums are much more expensive than they are for term insurance.
When buying life insurance, the first step is deciding how much cover you need. This is known as the ‘sum insured.’ Remember that the bigger the sum insured, the steeper your premiums will be, so you need to consider carefully how much you can afford to pay each month.
