Life Cover Mortgage Protection
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Nothing can replace a loved one. Life cover can help to ease money worries and prevent financial hardship by providing a cash lump sum which can be used for the purposes of your choice. There are two types of cover; the first which is typically recommended to protect a capital & interest repayment mortgage and the other which can be used to protect an interest-only mortgage.
Mortgage Protection
This is otherwise known as decreasing cover and is linked to the repayment of a capital and interest repayment mortgage. Here's how it works:
- The sum assured (i.e. the total sum of life cover) should be the same or slightly higher than the outstanding balance on your capital & interest repayment mortgage. The policy term should be the same or slightly longer than the remaining term of the mortgage.
- As the mortgage balance reduces over time, the sum assured of the life policy reduces in line with it. If the policy holder were to die or be diagnosed with a terminal illness during the cover term (subject to the conditions of the policy), a cash sum would be paid by the life company, which could be used to repay the outstanding mortgage balance.
Level Term Assurance
Unlike decreasing term assurance, the sum assured on a level term assurance policy remains the same right throughout the policy term.
The policy is ideal for:
- Protection for an interest-only mortgage where the balance owed to the lender remains the same until the end of the term. If the policy holder were to die or be diagnosed with a terminal illness during the cover term, a cash sum would be paid by the life company (subject to policy conditions).
- The policy could be used to provide additional benefit to your loved ones in the form of a lump sum which could be invested to provide an income. Affinity can help you decide on the appropriate level of cover for your family designed to fit within your budget.
If you would like to talk to us about your protection requirements please complete the call us on 0800 158 3520 or complete the enquiry form below. We look forward to hearing from you.