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What
is mortgage protection and why do we need it?
The
most cost-effective method of providing cover for your repayment
mortgage is through a policy where the sum assured decreases
in line with the outstanding balance on your mortgage. If
your mortgage is interest-only, you will require a term based
plan and that means that the level of cover provided by the
plan will remain the same for the duration of the policy.
The
way we look at it is the death only plan is the third party
cover and the death and serious illness cover is the comprehensive
cover.
We
always strongly recommend you opt for the latter plan as serious
illness can often create more financial hardship than death
alone. Statistically speaking you are more likely to have
a stroke, heart attack or have cancer diagnosed than you are
to die during the mortgage term. In any of these events the
mortgage will be fully paid off, even if you make a full recovery
and return back to work.
One
thing we also promote highly is that the scheme must have
guaranteed rates rather than quotes that are based on a reviewable
premium. The reason for this is that insurers may increase
their premiums at a later date depending on their claims experience.
So if we have an epidemic of say "CJD" then the
reviewable rates will increase greatly, however, the company
who has guaranteed rates will have to keep their premiums
at the same level throughout the term of the contract.
Final
word
We
hope that by taking this plan out you find it to be a complete
waste of money. That is because you have stayed healthy and
have not needed to claim on the policy. What mortgage protection
does offer you is 'peace of mind' knowing that if something
did happen, then losing the roof over your or your loved one's
heads would be one less thing to worry about at a difficult
time.
Click
here for a mortgage protection quote.
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