Introduction

Choosing the right mortgage protection plan involves understanding various aspects of insurance policies. These frequently asked questions cover both basic and complex topics, offering insights to help you make informed decisions about protecting your mortgage.

The Basics

What is mortgage protection insurance?

Mortgage protection insurance is a type of policy designed to cover your mortgage payments in case of unforeseen events such as death, critical illness, or loss of income due to disability.

How does mortgage protection differ from life insurance?

While life insurance provides a payout to your beneficiaries upon your death, mortgage protection specifically covers your mortgage repayments, ensuring that your family can keep the home.

Is mortgage protection mandatory?

Mortgage protection is not legally mandatory, but some lenders may require it as part of their lending criteria to ensure the loan is secure.

Can I get mortgage protection if I have a pre-existing medical condition?

Yes, you can, but it may affect the terms and cost of your policy. Insurers will assess your medical history when determining coverage eligibility and premiums.

Other FAQs

How do I choose the right amount of coverage for mortgage protection?

The right amount of coverage typically corresponds to the outstanding balance of your mortgage and considers your other financial obligations and family’s living costs. It’s advised to review your financial situation regularly to ensure adequate coverage.

Can I cancel my mortgage protection policy if my circumstances change?

Yes, you can usually cancel your mortgage protection policy. However, it’s important to understand the implications of not having protection in place, and the potential added cost of getting a new one if you are significantly older than when you first took the policy out.

How does changing interest rates affect my mortgage protection insurance?

For a decreasing term policy, changing interest rates can impact the alignment of your insurance with your mortgage balance. Regularly reviewing your policy in relation to your mortgage is recommended.

What happens to my mortgage protection insurance if I decide to remortgage?

If you remortgage, you may need to adjust your mortgage protection to match the new mortgage terms, ensuring the coverage is still adequate for the outstanding loan amount.

Are there tax implications for my beneficiaries with mortgage protection?

The payout from a mortgage protection insurance policy usually goes directly towards paying off the mortgage and doesn’t typically have direct tax implications for beneficiaries. However, it’s important to consult with a financial advisor for specific tax-related advice.