What is Mortgage Protection? 

Mortgage Protection is a cover directly linked to the repayment of a mortgage. Pays out a reducing sum insured over a specified period in order to repay a capital & interest repayment mortgage in the event of death or critical illness.  Many mortgage protection policies are actually decreasing term assurance plans, but the term mortgage protection is used, as it is more easily recognizable to the general public. Insurance policy to pay the mortgage balance if the mortgagor dies before the mortgage is fully paid. Mortgage Protection Insurance covers your usual monthly repayment and may cover other related payments such as house insurance premiums. 

Types of Mortgage Protection 

Decreasing Term Insurance

Decreasing term insurance means that you do not have to experience that feeling of responsibility that your family would suffer a serious financial setback should inopportune circumstances result in them having to take over your payments. Decreasing term insurance is designed for those with a repayment mortgage the sum of cover with a decreasing term insurance policy will also go down in line with the mortgage balance. With the decreasing term insurance, the cover is usually taken out over the term of the mortgage, and payment is made should you die during the term of the policy. 

Level Term Insurance

Level term insurance cover is for those that have a repayment mortgage, where the principle balance remains the same throughout the term of the mortgage and the repayments made by the property owner cover the interest payments on the mortgage only. Level term insurance is for the people who know they need coverage for a certain number of years, such as a small business owner who has a short to moderate-term risk to cover; or people who are unsure of their long-term goals and want something affordable today, with the opportunity to change their minds tomorrow. 

How it works.

Mortgage protection insurance covers this potential financial disaster. You can purchase a policy when you first buy your home, or later if you think your situation warrants it. The main thought behind mortgage protection insurance is straightforward that you pay a premium and if you die during that time, the insurance pays off the rest of your mortgage. The borrower pays for the coverage, but if the loan is defaulted, the lender is the policy's beneficiary. 

How to get it

Policy covering a mortgage of $100,000 will cost about $50 a month for a 40-year old non-smoker, depending on what state you live in. If you take out a large mortgage initially, your premiums will be higher as you pay your mortgage off, the amount your policy pays off goes down and your policy premiums remain the same because the payments have been calculated with the decreasing death benefit in mind. 

What is Importance of Mortgage Life Insurance?

Mortgage life insurance policy runs for a fixed policy term most people take it put to run concurrent with their mortgage. When you die before the end of the term period, the policy can help pay off outstanding balance of the mortgage on your home. Mortgage life policies are available on a single or joint life basis and if you have a joint life policy, the amount is paid out on the first claim only. Premiums as well as terms of the policy and other benefits can vary wildly from provider to provider and you could be surprised just how cheap mortgage life insurance can be, without any compromise on cover.