Mortgage Protection

Mortgage protection insurance is a type of life insurance policy that pays a lump sum direct to your lender to pay off your mortgage if you die. Your policy runs for the same length of time as your mortgage, and the amount you pay each month is fixed for the term of the mortgage.

If you are under 50 when you take out a mortgage for a home you will live in, your lender must make sure you have life insurance to pay off the loan if you die. The main reason for this is to make sure your family home would not have to be sold to pay off the mortgage. If you are over 50 or if your mortgage is on an investment property you do not have to take out this insurance, but it can be an advantage and some lenders may insist on it as a condition of getting the mortgage.

Your mortgage protection sum assured is the amount that would be paid out to clear your mortgage if you died, so it must be at least as much as your mortgage. It generally reduces from year to year as the amount you owe on your mortgage goes down. This is called reducing term assurance.
Do I need mortgage protection if I already have life insurance?
Mortgage protection is designed to pay off your mortgage if you die, not to provide a cash sum to your dependants. So, you will usually need separate life insurance to provide for a cash lump sum if you have a dependant

Mortgage protection is designed to pay off your mortgage if you die, not to provide a cash sum to your dependants. So, you will usually need separate life insurance to provide for a cash lump sum if you have a dependant