Life insurance is something that many people do not consider until they have a mortgage. A mortgage on a home is one of the biggest monetary agreements you’ll ever have and with it comes a huge amount of responsibility.
The financial responsibility of a mortgage is one that will fall onto the shoulders of those you leave behind and this thought is very unsettling to most people. This concern is not one that has gone over the heads of mortgage providers and the majority of them attempt to monopolise on the situation by offering you mortgage life insurance as part of your mortgage package.
Please keep in mind, though, that it is not obligatory for you to take out life insurance with any mortgage, although some policy providers may try to use technical jargon and clever sales pitches to add it on, you need to be mindful of this and never sign anything without being completely clear in every aspect of the policy you are taking out.
Here are some points of consideration to take into account before the purchase of any policy:
This is different to life insurance and should not be confused with it. Mortgage companies are likely to try to add this cover to your loan; it basically means that if you pass away, your mortgage will be paid off.
This may not be the best situation for you and your family, what about the other monthly bills? Food? Childcare? There is a lot more to life than your home so if you are going to take out any cover, you may as well have a policy that covers all of the financial aspects in your life.
A Shrinking Pay-out
As the years go by, your loan decreases, meaning that the value of a life or mortgage protection plan becomes less valuable. Once your mortgage is paid off, your policy will expire, which means you will have been paying for your policy and mortgage premiums for years and never see a pay-out.
If you pass away later in life, once the mortgage is paid off you will have nothing to show for the years you paid premiums.
You should always shop around to get the best deal. If you are young and relatively fit, the ball is in your court. If you are looking for a policy that is far more bespoke and is tailored to your needs and concerns, you are much more likely to be happy with the deals offered to you when approaching independent providers, as opposed to taking on policies offered by your mortgage company who often have a much more basic or generic level of cover.