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Why Would I Need Mortgage Life Insurance? |
By:
Chris Clare |
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Why would I need mortgage life insurance?
Chris Clare
If you already have a life insurance policy, obtaining mortgage life insurance may seem like a pointless exercise, but is it?
Mortgage life insurance can help insure your family's financial situation by paying off the remaining balance of mortgage should you die before the end of your policy's term. Should you have a repayment mortgage then the level of coverage you have will decrease in line with the level of the debt, so you are only paying for the appropriate level of cover from your life insurance that your current situation requires.
Mortgage life insurance can be divided into two categories, joint and single-life. Upon purchasing it you pick the amount of cover required for your particular needs and the exact length or term of the policy. For a slighty higher premium you could and should add critical illness to your policy as the advantages in the level of coverage outweighs the financial cost.
What the critical illness benefit is, is an additional benefit on the policy that allows the insurance company that underwrites the policy to pay out either on death of the principle insured, or upon the diagnosis of any of a number of specified critical illnesses, whichever should occur first.
If the value of the policy is paid out as a benefit, the mortgage policy is then terminated. If, however, you manage to live until your whole mortgage is paid off and have not had to cash in your mortgage life insurance policy, the policy ends without anything being paid out.
Unforrtunately your mortgage life policy has no monetary value at its end. From another perspective, if you have a policy which has run right up until the end of your mortgage term, you have paid off your entire debt and therefore have no need for the policy and are debt free. If perhaps you are in the process of reviewing your current mortgage life policy, be sure not to cancel the current policy until you are sure that you have been given the go ahead for the next one. Sounds like common sense, but if you cancel one policy before you have definitely established another, you may find yourself uninsured and unable to reinsure yourself.
The term of your policy can last between one and forty years and the actual term can be chosen to match the term of the mortgage and your own personal financial needs. You can decide to either have full coverage for the entire amount of the mortgage or any portion there of, as your situation dictates.
It is worthwhile noting that the majority of mortgage life insurance providers should allow you to increase the coverage of your policy if your circumstances dictate it necessary. Say for example you have to take out a loan for home improvements. This extra money will need to be covered. On the other hand, it may be that you bought your home as a single person but have since got married. There may be scope to re-evaluate the policy you have to tie in with your new situation.
searching on the internet you will definitely find several sites which can give you good, well written advice on how to go about finding the right policy to suit your situation and requirements.
To summarise, it is imperative that you seek the advice and expertise of a qualified insurance broker when seeking to obtain a mortgage life insurance policy. He will be able to show the advantages entailed in critical illness cover and whether it's for you. You will have to decide whether to cover the whole value of the mortgage and also whether the policy will run for the full term of the mortgage, if not longer. Happy hunting.
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Article Source: http://www.statssheet.com/articles/article75288.html |
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