Mortgage Life cover for a Mortgage Protection need could either be a Mortgage Term Assurance contract where the amount of cover you choose remains the same throughout the term (unless the policy is amended) or a Mortgage Decreasing Term Assurance contract where the level of cover provided decreases broadly in line with the outstanding mortgage balance. Mortgage Decreasing Term Assurance is designed to repay the amount outstanding on a repayment mortgage 'capital and interest' repayment mortgage should you die during the term of the mortgage. In other words, if the policyholder(s) die prematurely, the outstanding loan amount on the mortgage will be repaid in full.
Policies can include other benefits known as ‘riders’, which are extra sorts of cover, added on to the life cover.
Benefits can include (not exhaustive) -
- Waiver of premium - The premiums are waived but the cover continues if you cannot work due to illness or injury.
- * Critical illness cover - the benefit is paid before death on the diagnosis of life shortening disease (e.g. cancer). This benefit may replace the death benefit, or it may be paid as well
All these riders cost extra and are only paid subject to meeting the policy criteria. For additional information see Protecting Yourself and Your Family.
There are also other types of protection plans which may also be relevant to consider:
- Income protection benefit - which can pay a percentage of your income to you if you cannot work due to illness or injury.
- Unemployment benefit - a variety of income protection benefit covering unemployment.
THE PLAN WILL HAVE NO CASH IN VALUE AT ANY TIME AND WILL CEASE AT THE END OF THE TERM. IF PREMIUMS ARE NOT MAINTAINED, THEN COVER WILL LAPSE.
*PLANS MAY NOT COVER ALL THE DEFINITIONS OF A CRITICAL ILLNESS. THE DEFINITIONS VARY BETWEEN PRODUCT PROVIDERS AND WILL BE DESCRIBED IN THE KEY FEATURES AND POLICY DOCUMENT IF YOU GO AHEAD WITH A PLAN.