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Mortgage Protection Policies

The aim of good planning is to ensure that the policy matches the risk.

Repayment Mortgage

If you have a repayment mortgage the amount you owe decreases every year as you slowly repay the debt. In that case you need a policy where the cover decreases as well. Typically this kind of policy will be cheaper than a Level Term Assurance.

Decreasing Term Assurance, where the rate of decrease in cover is designed to reflect the rate at which the mortgage debt will be paid and cover debts where the capital outstanding decreases over time. With such policies there is no surrender value and cover will cease if premiums are not paid.

Interest Only Mortgage

The main elements of a Level Term Policy are:

If you borrow £100,000 on an interest only mortgage, you will typically owe £100,000 right up until you pay the mortgage off.

Level Term Assurance can provide a guaranteed amount of insurance cover for a guaranteed premium for however long the protection is needed.

Last updated on 18th January 2010


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