Protecting you and your loved ones in the event of your death or being diagnosed as suffering from a critical illness can provide financial stability and reassurance. Although this is a fact of life most people do not want to spend too much time considering, it is vital to take at least the time required to set in place sound mortgage protection. After which, you can be comforted with the fact that should the worse happen, your family will be taken care of financially.
Mortgage protection can provide you with either a life insurance only policy, a critical illness only policy or a combination of both.
If you were too choose a life insurance cover only policy, this would effectively mean that a cash sum will be paid out if you are to die, or if you are diagnosed as suffering a terminal illness, before the end of your insurance plan. For example, should your mortgage protection be in the amount of £120,000, this sum will reduce each month until the plan ends. The reducing amount is always in line with your outstanding mortgage.
If you were to choose critical illness cover only, this would mean that a cash sum would be paid out only if you are diagnosed as suffering from a range of illnesses specified in your document. A list of the illnesses can be requested before you agree to any terms and should be read in full. The cash sum will only be paid out in the event that after a diagnosis has been made, you are still alive 21 days later, before the end of the plan. Again, the cash amount reduces each month in line with your mortgage.
Or, you can choose to combine life insurance with critical illness for a fully comprehensive mortgage protection insurance. By taking out both life insurance cover and critical illness cover, a cash amount will be paid out in the event of your death or if you are diagnosed as having a terminal illness or one of the specified illnesses, whichever happens first, before the end of your insurance plan. Just like the separate critical illness and the life insurance policy, the combined option lump sum also reduces in line with your mortgage.
When applying for mortgage protection, a simple application form is required to be filled out in order to make an assessment. General questions in regards to your health, age and lifestyle will be made to obtain a current and relevant profile.
As with most types of insurance, exclusions will apply. For example, all illnesses must be declared when completing your application, as most policies do not allow current illnesses to be included in the cover. That means that only new illnesses can be claimed against.
There are several reputable mortgage insurance providers available. Companies such as Scottish Widows, Norwich Union and Standard life all have good reputations for supplying quality mortgage cover. Although it is always advisable to look into all other options to make sure you are getting the best possible deal for your requirements.
