Life insurance provides a tax free lump sum paid to your dependents in the event of your death. This lump sum is of vital importance if you have a family. In most cases people do not have savings big enough to pay off the mortgage, cover childcare costs, pay for funeral costs and any other outstanding debt. This lump sum therefore safeguards the family home and alleviates family financial commitments during what is a very stressful time.
There are two types of life insurance policy which may sometimes be referred to as term insurance.
Level term assurance: this type of policy covers the individual for a fixed amount throughout the duration of the policy term. This type of policy is perfect for ‘interest only’ mortgages where the amount owed does not decrease over time.
Decreasing term assurance: this type of policy also pays out a lump sum in the event of death but the amount paid decreases over time. This type of policy is best suited when taken out with a repayment mortgage. Over time as your mortgage decreases this policy is designed to cover most or all of any outstanding amount left on your mortgage.
At The Mortgage Xchange, when arranging your mortgage, we search the whole market and recommend the best life insurance option for you. If you do not currently have life insurance feel free to click here to contact us where we would be happy to understand your individual circumstances and make a recommendation best suited to your needs.
Please Note: The Mortgage Xchange is a partner of Scott & Goose LLP who are directly authorised by the Financial Conduct Authority under reference 661183. Your home may be repossessed if you do not keep up repayments on your mortgage.