What is mortgage life assurance?
First off, let’s define this: we’re talking about assurance (meaning you will die at some point) rather than insurance (which is works on the risk of death rather than the eventuality).
It’s a type of policy that will pay off any remaining debt on your mortgage should you die. This leaves your dependents safe in the knowledge that they won’t be left with crippling debts. If you already have an endowment mortgage there’s no need to take out mortgage life assurance as it is included in your existing policy.
Is Mortgage Life Assurance right for you?
Having some form of cover is a pretty good idea, especially if you have a family. On top of this, most lenders do recommend that you buy a policy when you get a mortgage but, in most cases, the lender will attempt to sell you one of their own insurance products. On one hand, keeping all your payments with one lender may make life easy but doesn’t necessarily mean you’ll get the best deal out of them.
How much will it cost?
There are a number of factors that will affect the cost of your mortgage assurance.
- The bigger your mortgage, the higher the price for assurance.
- The length of term also affects the cost
- Likelihood of death during the term of assurance will also affect the premium so age, sex and lifestyle are taken into consideration (smoking, dangerous sports, occupation etc)
The hard fact: the lower the risk of that you’ll die, the cheaper it gets. DO NOT try to hide important information from the insurer – if you lie then die they could refuse to pay up.
Quit smoking or planning to?
The bottom line: if you are a non-smokers you will pay a lot less for your assurance, period.Now, before you rush to throw those lung busters in the bin and proclaim yourself “smoke free” consider this: most companies will only accept you as a non-smoker after one year of kicking the habit. Don’t be tempted to lie about this as a simple CO2 test will, generally, show if you have stopped.
Which assurance policy is best for you?
To be fair, the cheapest option will normally suffice. The payout on death is fixed so the insurance companies can’t really argue the fact once you’re officially pronounced dead! To be safe, read up on the small print of the policy before you sign on the dotted line; look for review clauses and confirm that all payments are fixed.
Finding the Cheapest Assurance Policies
The simplest, and probably best, approach is to find an execution only broker (I know, it sounds ironic when you consider we are talking about life assurance policies!) Typically, this type of broker will charge you a very small fee for finding you a policy.
”I have a medical condition!”
In this case, the execution only brokers may not be the best option. The type of medical condition you have will in all likelihood affect the type of mortgage life assurance policy you select. The harsh reality is that insurance companies don’t want to have to cough up the cash if you’ve only made a couple of payments. Typically, any issues you have may requirements a degree of advice, or research, on the brokers part which means you will pay more for your premium. At the end of the day, it’s a hard fact of life – work requires payment.
We could delve into the ‘best’ mortgage life assurance deals on the market, but, to be fair, the rates can vary on an almost daily basis. The simplest approach will be to go to an insurers or brokers web site and see what information they have. Look for a contact number then give them a call for a more thorough look at the policies on offer.