Mortgage Life Cover For Peace of Mind For Your Loved Ones

Taking out a mortgage is a huge responsibility as, if you do not continue to meet your mortgage repayments, you are at risk of losing your home. With this in mind you might want to give some thought as to how your loved ones might manage if you as the main wage earner were to die before the mortgage balance was paid off. If you want peace of mind of protection for your mortgage in the event of your death then you may wish to consider mortgage life cover.

What is mortgage life insurance?

Mortgage life cover is also known as decreasing term insurance and is one of the several types of life insurance available. This specific type of protection is typically taken out by the main wage earner, the one responsible for repaying the mortgage each month. If both partners pay an equal share in the mortgage repayments then you may wish to take out mortgage life insurance for both names on the same policy, a joint policy. If taking a joint policy the insurance company typically pays out upon the death of the first policyholder. Alternatively, you may wish to take out separate policies.

How does mortgage life protection work?

When taking out mortgage insurance life cover you take out the policy for the amount that is left outstanding on your mortgage at the time of applying for the life cover. For instance, if you have £10,000 left to pay on your mortgage this could be the sum insured.

The term you take your mortgage life cover over is the term that is left on your mortgage at the time of applying for life insurance. For example, if you have 5 years left to pay on your mortgage this is the term that you take out mortgage life insurance over.

With the above example, you are covered for £10,000 and for a term of 5 years. If the person named on the insurance were to pass away during the 5 year period, the mortgage balance would be cleared by the proceeds from the life insurance.

As you continue to pay your mortgage each month the amount left owning on it decreases of course, and so does the amount your decreasing term insurance pays out. If you outlive your insurance policy this means you have paid off your mortgage and there is no balance, so there is no payout and the policy simply expires.

Mortgage life cover may make a huge difference for your loved ones in the event of your death. Without a policy, they may struggle to find the money for the mortgage repayments and this may, in the worst case, lead to repossession and eviction. You may also wish to give some thought to how you and your family might manage if you suffer a critical illness. With advancements in medicine, many people suffering from a critical illness now live longer with their incapacity. However if you are disabled and unable to work you may struggle to find the money for your mortgage repayments. With this in mind you may want to consider having critical illness insurance alongside your decreasing term insurance.

David Thomson is Chief Executive of BestDealInsurance a completely independent specialist broker dedicated to providing their clients with the best insurance deal. They offer great value life insurance as well as, critical illness and income protection, ensuring that their clients have the protection they need, without leaving a hole in their pocket.

Choosing Life Cover to Protect Your Mortgage

Buying a family home is a time when many people begin thinking about taking out a life insurance policy to go along with it. A mortgage is very often the most significant financial decision that any individual makes, and it is always prudent to find a way of protecting your mortgage, to ensure that your loved ones will not suffer financially from the loss of your income if you should die. A carefully-chosen life insurance policy is an ideal method of achieving this protection.

Level Term and Decreasing Term Life Cover

The most common way of protecting your mortgage is to purchase term life assurance. Selecting life cover for mortgage protection requires making a choice between two different types of insurance-level term and decreasing term insurance.

If you purchase level term life cover, the amount you are insured for remains constant over the life of the policy. With a decreasing term policy, on the other hand, the size of the potential pay-out decreases as the mortgage is paid off. Regardless of which type you choose, the policy ends automatically if a claim is made, or when the mortgage is paid in full.

The Cost of Mortgage Life Insurance

The cost of mortgage life cover depends on several factors. The most important determinant of the cost of the policy is the terms and conditions of your mortgage-the amount you borrow, and the amount of time you'll require to pay the mortgage in full. As will all types of life cover, the cost also depends on your lifestyle, age, and physical health. Lastly, the type of policy you choose-level term or decreasing term insurance-also affects the cost.

In most cases, level term mortgage cover is more expensive than the decreasing term variety. This is because with decreasing term insurance, the size of the pay-out decreases over time, so the overall cost of premiums is reduced to reflect that. Because all other aspects of these two types of policies are more or less equal-in both cases, the mortgage is fully paid in the event of a claim being made-the type of insurance you get will typically depend on how much you can afford.

Level term cover does offer one advantage that decreasing term insurance does not. Because the size of the pay-out is constant over the life of the policy, your dependents will benefit from increased financial security if there is money left over after the mortgage has been paid. For this reason, level term insurance should be your goal if it's affordable. This type of insurance provides another advantage if you have an interest-only mortgage, as your repayments increase over time, and equity is slow to build-a level term mortgage can provide increased financial security in this case.

Other Considerations

Two other important decisions to make are whether to choose joint insurance or two separate policies for you and your partner, and whether or not to purchase additional critical or terminal illness cover. Some policies may include this coverage automatically, and some don't, so it's always important to read the fine print and make sure you understand what you're covered for. By the same token, a joint policy isn't always the best solution, even for a married couple, so it's equally important to check investigate all your available options thoroughly before deciding between joint and separate policies.

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Life Cover - Protecting Your Mortgage

For most of us, a mortgage is the essential source of funds that enables us to buy a home. We commit ourselves to making monthly repayments over many years. But what if the mortgage holder dies before the loan has been fully repaid? Would those left behind, family and loved ones, have sufficient resources to pay back the lender? If not, would the property have to be sold to obtain the necessary funds? Even if the deceased's nearest and dearest were able to pay off the loan, what impact would that have on their finances?

There is an obvious need to ensure that funds are available, on death, to pay off the mortgage. This is where a decreasing life cover policy can play an important role. This type of policy pays out a lump sum, on death or diagnosis of a terminal illness, and the amount payable decreases over the term of the policy. This is ideal for those with a repayment mortgage, where the amount of loan repayable also reduces throughout the mortgage term. Decreasing life cover is also less expensive than level life cover (where the amount payable on death stays the same throughout the term of the policy). Cover can be taken out by one person or by two people jointly. For joint policies, the life cover will be payable on first death.

The lump sum payable, under a decreasing life cover policy, will often reduce at a fixed rate set by the life cover provider. This amount may be more or less than the actual mortgage debt on death. Some providers offer to match the outstanding loan amount subject if specific conditions are met. These conditions are, typically, that the loan has stayed as a repayment mortgage, that all loan repayments have been made and that the mortgage value or term have not been increased. Many policies also offer a free period of cover, subject to certain conditions, between the exchange of contracts and completion stages of a mortgage.

Another common feature is to allow policy owners to increase their amount or term of cover when they either move to a new home or make home improvements. The increased cover, subject to certain conditions and limits, requires no further evidence of health, occupation or pastimes. The overall cost of the cover will also increase.

So, for anyone with a mortgage, it makes extremely good sense to ensure that appropriate life cover is in place. This will ease the financial burden faced by their loved ones, should the worst happen. The cost and features of decreasing life cover make it the obvious choice for mortgage protection.

John Lewis Insurance offers a range of insurance services selected by the John Lewis Partnership. These include home, car, pet, travel, wedding, event and life assurance products. Customer can visit Johnlewis-Insurance.com for further information.

Mortgage Life Cover - Protecting Your Loved Ones

Taking our protection to ensure that your family would not be left struggling financially in the event of your death is essential. Life is hard after the loss of a loved one and this is a time when they do not want to be worrying where to get money from to pay monthly outgoings. One of the outgoings could be a mortgage, if you want to ensure that your family would be left mortgage free in the event that you passed away while still owing on the mortgage then you could consider taking out mortgage life cover.

Mortgage life cover is known as decreasing term assurance. The insurance can be taken by the policy holder insuring the remaining balance of their mortgage over the term left on the mortgage. As the name of the policy suggests the amount that you insure, which your loved ones would get back, would decrease in line with the mortgage balance as you pay off the mortgage each month. If you outlive the policy then the mortgage will be paid up and so no payment would be made. If you should pass away at anytime during the term of the life insurance your loved ones would get the amount left on the mortgage at the time of your death.

The cost of life cover would take many different factors into account. One of the things that will set the premiums is of course the amount you choose to insure. Your current age will also be taken into account when you take on life insurance as will any ongoing medical conditions. If for example you suffer from diabetes or asthma then you could expect to pay out more in premiums for life insurance. Your family history will also be taken into account and any illnesses taken into account. If you are seen to have a job that is dangerous then you could also expect to pay out more for your insurance. The same would apply to if you took part in any dangerous activities which could include such as flying and mountain climbing.

Of course mortgage life cover would only provide your loved ones with financial security in the event of your death for your mortgage. If you wanted to leave your family financially secure so they would have a sum of money in the event of your death to be able to maintain their way of life in general and any other outgoings they might have then you would need to give some thought to taking out a different form of life insurance. You might want to give some thought to taking out term assurance or whole of life insurance. Term insurance could be taken by choosing how much cover to take and how many years to take it over, if you passed away during this time your loved ones would receive a lump sum payment. If you outlived the policy it would expire and no pay out would be made. Whole of life can be taken by choosing how much life cover is needed and as long as you continue to maintain those payments your family would receive payment upon your death.

David Thomson is Chief Executive of BestDealInsurance an independent specialist broker dedicated to providing their clients with the best insurance deal on their home insurance, car and life insurance.

The Benefits of Using an Independent Mortgage Adviser

Types of mortgage advice

So what are the different types of mortgage advice and where would you expect to find them?

Non-advice

This type of mortgage broker offers the least consumer protection, they will simply ask a set of questions to narrow the customers requirements and thus filtering the number of mortgages available. They then present the customer with a small list of possible mortgages for the consumer to choose one appropriate. The consumer protection here is based on the script of questions the broker asks. The script is a process determined prior to the consumer appointment, and is impersonal. Therefore specific personal circumstances are unlikely to be assessed. It also assumes that the customers answers are factually correct and the final choice is made solely by the consumer. Although no advice is offered these brokers do handle the arranging of the mortgage on the consumers behalf, and therefore dealing with all the chasing and removing stress from the process.

Where would you expect non-advised brokers to exist?

Well believe it or not many non-advised brokers are within the high street banks and building societies.

Advice-only

This type of services is where a mortgage adviser uses their knowledge and skills to provide the most suitable mortgage to suit a consumers personal circumstances. This will involve a full fact finding interview, affordability assessment, discussion on the consumers future plans and aspirations, all of which provide key facts on a consumers requirements, and therefore a means for the adviser to identify suitable products. The adviser will not however, handle the arranging of the mortgage, and therefore the consumer would need to deal directly with the bank or buildings society to arrange the mortgage.

Where would you expect advice-only advisers to exist?

These advisers generally do not exist alone this is often a service provided through the 'Independent Mortgage Adviser' type below. And often comes about when the most suitable mortgage is only offered direct through high street (i.e. not through mortgage advisers/brokers). The adviser would therefore offer an advice-only option to the client and often charge a fee for this service. Although the client must deal directly with the bank or building society their mortgage adviser often provides support to the consumer.

Tied mortgage advisers

Tied mortgage advisers come in two forms 'only offering mortgages from one lender or its own mortgages' or multi-tied 'only offer mortgages from a limited number of lenders'. This clearly limits the number of mortgage products available to match a consumers personal circumstances and in a lot of cases they may not be able to offer the most suitable mortgage product and therefore advice may result in the best mortgage they can offer, being woefully inadequate.

Where would you expect tied mortgage advisers?

High street branches. A consumer calls into their local building society branch and their in house mortgage adviser can only offer mortgage products from that building society. Consumer choice and mortgage product suitability are considerably reduced. Whats more, high street branches often offer low mortgage rates/fees as a loss leader (marketing term to bring in business) and then try to sell their tied insurance products which are often also woefully inadequate and expensive.

Whole of market advice By far the best coverage these advisers can offer mortgages from all the UK mortgage lenders (having mortgage adviser/broker routes). The vast amount of mortgages available through these advisers is likely to cover the individual circumstances of a consumer. Whole of market mortgage advisers offer advice through conducting a full fact finding interview, affordability assessment, discussion on the consumers future plans and aspirations and then can arrange the mortgage through the lender thus alleviating the stress which comes when purchasing a house.

Where would you expect whole of market advisers?

These advisers are usually separate firms often found in the yellow pages or through the internet they are sometimes linked to estate agents. On an initial meeting mortgage advisers should declare if they are whole of market and this will be disclosed in the 'Initial Disclosure Document' they provide you. If you are not sure if an adviser is whole of market then ask them.

Independent whole of market mortgage adviser

Finally this type of adviser has the ultimate scope of the mortgage market, not only can they offer mortgage advice from the whole of market (lenders with mortgage adviser routes) but can also offer an advice only process if they identify a high street direct deal is more suitable. The 'Independent' statement indicates that the adviser must offer the consumer a fee based service if required. This means that rather than the adviser taking commission as payment for the mortgage advice, the consumer can opt for paying a broker fee and any commission is rebated to the consumer. The benefit of the fee based service is the consumer knows the adviser will not be swayed by higher commission mortgage products when selecting a suitable mortgage, however these days this is highly unlikely as the mortgage adviser must prove to the regulator why a particular mortgage is most suitable. Some occasions where the commission is quite considerable this would mean the consumer could receive more money than the broker fee paid and therefore would be better off taking the fee based approach.

Where would you expect to find Independent Whole of Market Advisers?

Like the author of this document Independent Mortgage Advisers are usually separate firms often found on the high street, yellow pages or through the internet and they are sometimes linked to estate agents. On an initial meeting an independent mortgage adviser would declare that they are whole of market and that they offer a fee based approach if required and this will be disclosed in the 'Initial Disclosure Document' they provide you. If you are not sure if an adviser is independent and/or whole of market then ask them.

What do independent whole of market mortgage advisers do for consumers?

The benefits of opting for an independent whole of market mortgage adviser include but are not limited to the following: -

Treat customers fairly.
Take time to gain key factual details of the consumers personal circumstances and aspirations.
Support and inform the consumer from initial enquiry right through to completion and beyond.
Provide an informed view on the housing market in general (price negotiation, leasehold issues etc).
Provide a individually tailored service specific to the customers needs, not a faceless "one size suits all" (non-advised) service.
Advise consumers to thing about their long-term interests as well as the short-medium term thus minimising risks.
Work for the consumer - estate agents, lenders and insurance providers have a different agenda.
Explain the features and benefits of different mortgage and protection options.
Free to act based on conscience and fairness as not usually directly targeted on specific areas.
Protect consumers data and privacy.
Provide general support during what is acknowledged to be one of the most stressful events in life.
Provide a knowledgeable "Ally" in what can be a very worrying process.
Provide proficient, impartial, examination of mortgage products.
Identify when specific lending criteria restricts consumers personal circumstances.
Expert guidance in complex scenarios (shared ownership/shared equity, right-to-buy, adverse credit).
Identify the potential lender in unusual situations, thus avoiding the need for multiple credit checks.
Select the best protection providers for consumers with health issues or unusual insurance histories.
Choose the most appropriate products, from the whole of market for each aspect of a consumers mortgage and protection needs, and thus increasing their ability to afford their commitments, even when things go wrong.
Highlight unusual exclusions on protection and general insurance products.
Ensure the provision of appropriate and customized protection products.
Quickly find an alternative lender if declined without wasting the consumers time.
Can arrange property insurance in ample time to be ready for exchange of contracts on purchases.
Encourage competition and innovation from lenders.
Assist in calculating affordability, ensuring that consumers can afford their mortgage and protection commitments, along with their other commitments.
Perform data input/entry for the consumer, reducing errors, omissions and most importantly non-disclosure.
Take responsibility for the advice and recommendation provided, thus increasing consumer protection.
Protect the consumer from corporate sales tactics used by some lenders and estate agency chains.
Understanding the urgency of some transactions and "go the extra mile" to meet deadlines.
Collate, verify and supply documentation for the lender, thus reducing delays in processing and expedite the process for the consumer.
Liaise with third parties in the transaction, tracking progress and any developments updating consumers throughout.
Use past knowledge and awareness to predict problems and resolve them in advance.
Act as advocate for the consumer during the application process.
Explain the mortgage offer and assist in fulfilling the offer conditions.
Can find appropriate lenders and insurers for unusual properties ( thatched roof, flying freehold flats etc).
Protect consumers from aggressive third-party marketing.
Often personally available outside of normal working hours to answer questions or resolve issues.
Care about consumers and provide an ongoing long-term service, often several generations of the same family.



Steve Wentworth formed his firm Wentworth Financial Services Ltd in November 2007 and has been in the Mortgage Industry since November 2002. Visit his website if your require an Independent Mortgage Adviser.

What is Mortgage Life Cover?

When it comes to life cover there are many different choices to make. One of the main types of life cover is called mortgage life cover. This is a simple life cover that allows you to pay off the mortgage to your home in the case of your death.

There is no question that death is hard on everyone affected, but it can be especially hard on the family members that are responsible for paying off your mortgage and other bills after you pass on. It is a worry that shouldn't be left with your spouse or dependents that may not have the money to pay off your mortgage. Not only could your death leave them with a huge burden, but if there are no savings or life cover in place, it could mean they could lose their home.

Mortgage life assurance pays off the remaining debt on your mortgage payments if you die within the life of the mortgage. As the years go on, the amount paid is decreased as your outstanding mortgage debt decreases. For example, if you die within the first few years of the policy the sum paid out will be significantly higher than if you died in the last year of the mortgage.

Mortgage life insurance is not the same as traditional life insurance because the payoff amount paid is specifically attached to your mortgage so there won't be additional monies paid to surviving family. It is however definitely worth having because it is not that expensive and can be combined with whole or term life to make sure your family is better covered in the case of your death.

Paul Eden is a mechanical engineer who recently purchased Life Cover and Critical Illness Cover to protect his family. He owns and maintains Cheap Life Cover [http://cheaplifecover.org], a resource for those investigating similar purchases.