Life Insurance for your Mortgage

Secure the family home by ensuring that your mortgage can be cleared if the worst happens.

Without Life Insurance for your mortgage, you are putting your family’s home at risk. If you or your partner were to pass away or suffer a serious illness then the mortgage debt still needs to be paid. With the loss of a wage earner this can add unnecessary stress at an already difficult time.

How would your family manage to continue making monthly payments if your income into the household was lost? The monthly mortgage repayment is the single largest outgoing for most families. By clearing the mortgage this will create financial breathing space when the family needs it most.

You’ve worked hard to buy your family home. Now make sure you protect it.

Mortgage Life Insurance is a very popular type of cover that virtually all homeowners should have. Taking out a policy is very straightforward and provides peace of mind, along with financial security that will help to:

  • Secure the family home for your loved ones.
  • Remove the worry of missing payments.
  • Prevent repossession.

You may already have Life Insurance or Critical Illness Cover to protect your mortgage. If so, when was the last time you reviewed your policy? Have you moved house since you did? By letting us review your Mortgage Life Insurance it’s possible that we can help you to make a substantial saving on your insurance premiums.

Different types of Life Cover for your Mortgage

Level Cover for your Interest Only Mortgage

With this type of mortgage the monthly payment you make to the lender covers the interest only and doesn’t chip in to the outstanding balance, therefore the amount you owe the lender remains constant. Level Cover ensures that your cover amount also remains constant ensuring your family receive the required pay out to clear the mortgage.

Decreasing Cover for your Repayment Mortgage

The amount of Life Cover reduces each year, typically in line with the outstanding balance of your mortgage. This is the most suitable and cost effective way to protect a repayment mortgage.

Level v Decreasing Cover - Info - 20.03.2016

 

Beware of buying Life Insurance from your Bank or Mortgage Broker!

You can purchase Life Insurance virtually anywhere now, however, the cost for identical cover can vary dramatically. A pint of milk doesn’t cost the same in every shop and insurance isn’t any different either!

When your bank or mortgage adviser has sorted out your mortgage, it’s likely that they’ll use the ‘would you like fries with that’ approach to tag on some insurance. Whilst it may seem logical and convenient to use the same person who’s helping you raise finance, you are unknowingly restricting your options and could end up paying around 50% more than you need to – which can total thousands of pounds over the term of a policy.

Read this article in The Telegraph which explains more.

Here at Vita we can source discounted premiums from all insurers in the UK and are experts in this field.

Critical Illness Cover

Considering whether to include Critical Illness Cover is one of the most important financial decisions you will ever make for yourself and your family. Please take 5 minutes to read our dedicated page.

Critical illness Cover aims to give you peace of mind, ensuring you can receive a tax-free lump sum if you are diagnosed with one of the listed critical illness conditions under the policy.

Worryingly, a serious illness, such as cancer, stroke or heart attack, affects one-in-four women and one-in-five men before they reach retirement age. The latest statistics from Cancer Research UK show that 1 in 2 people in the UK born after 1960 will be diagnosed with some form of cancer during their lifetime.

If you, or those who depend on you, would face financial difficulties if you became critically ill you should seriously consider taking out Critical Illness Cover. When you’re critically ill, the last thing you need is any financial worry like the fear of losing your home because you can’t pay your mortgage or provide for you or your family.

View our dedicated Critical Illness Cover page to learn more.

Ensure the money is paid quickly to your named beneficiaries with our FREE Trust Service

Each insurer gives you the option to write your Life Insurance policy ‘in Trust’. This is a method which allows you, and nominated others, to control what happens to the policy proceeds after your death.

  • There is no cost for setting up a Trust – we will draft the form and assist you to complete it.
  • Ensures that the policy proceeds are paid directly to the people that you nominate.
  • Avoid a potential Inheritance Tax bill – Policy proceeds are not typically liable to be taxed.
  • Policy proceeds are paid at the earliest opportunity and not held up in Probate. (i.e. the proceeds do not form part of your Estate. They are kept separate).

Frequently Asked Questions

Will the money go directly to the mortgage lender?

No. You choose who should benefit when you pass away. If you claim for Critical illness Cover you will receive the money and can decide what to do with it.

How much will it cost?

Premiums will vary depending on your age, your health, your job, the amount of cover you want and maybe even your hobbies. This is why price comparison site quotes are often meaningless as they won’t account for your specific individual circumstances.

We will provide you with accurate premiums from the outset. Nobody likes to see a price and then be told it’s not available to them.

The Life Cover policy you buy is there to clear your mortgage and protect your family – not anyone else’s – so it’s worth finding a policy that will exactly suit your needs.

Do I get any money back if I don’t die?

No. For the period you are insured you continue to pay a relatively low premium in relation to the amount of cover. If you haven’t needed to claim then this is ideal – you’ve had peace of mind the entire time and you’ve not passed away prematurely.

It’s no different to car insurance – which won’t pay out if you don’t have an accident – or pet insurance – which doesn’t pay out if your pet stays well.

What if my mortgage changes?

You can cancel your Life Cover at any point, without any fees or penalties. In the event that you remortgage, clear a chunk off, borrow more, or move house, it’s worth letting us know so we can review your policy to ensure that you have the appropriate cover in place.

I’m the only person named on the mortgage, can my partner be covered?

Yes. Assuming that you would suffer a financial loss following their death then it would be worthwhile insuring your partner also.

Will my family have to pay tax on any life insurance proceeds?

The money from the insurance pay out is free from income and capital gains tax, but potentially liable for inheritance tax (IHT). However, your Adviser will help you to write the policy ‘in Trust’ (free of charge) to avoid paying IHT. This also ensures that the money goes directly to your nominated beneficiaries and won’t form part of your estate when you die – which means your family won’t have to suffer delays waiting for Probate.

Our friendly Advisers are available to answer your questions, provide expert advice and make recommendations – so please call us on 0800 988 36 37 – or you can request a call back.