What is Mortgage Life Insurance?

Mortgage Life Insurance is also known as Mortgage Protection Insurance.

It is a type of insurance that ensures your outstanding mortgage will be repaid if you died whilst your mortgage was outstanding. Within the insurance policy, your insurance company undertakes to send the proceeds of the policy direct to your mortgage lender.

If you are looking for insurance that pays your monthly mortgage repayments if you were ill or unemployed, then you need Mortgage Payment Protection Insurance. (For further information about Mortgage Payment Protection Insurance click here: What is Mortgage Payment Protection Insurance?)

To return to Mortgage Life Insurance; when you get a quotation for Mortgage Life Insurance, you will be asked whether your mortgage is a repayment mortgage or an interest only mortgage. This is because, if you have a repayment mortgage, the amount of cover you need will steadily decrease as your mortgage repayments reduce the sum outstanding to your mortgage lender. Therefore, you need a type of insurance which reduces the insurance payout the longer the policy has been in force – this what Mortgage Life Insurance provides.

If you have an interest only mortgage, the sum outstanding to the mortgage lender remains constant. In these circumstance you need normal Life Insurance cover. (For further information about Level cover click here: What is Life Insurance?)

In all cases the initial value of cover you require on your Life policy will be equal to the sum you owe your mortgage lender at the time you commence your insurance.

Mortgage Life Insurance which provides decreasing cover is much cheaper than normal Life Insurance which provides level cover.

An Important Hint: Try to avoid buying your Mortgage Life Insurance through your Bank or Mortgage Lender as they will be very expensive.

If you think bankruptcy filing is the last option for your critical situation, then think twice before filing it. There are lots of problem that you will face in future after filing it. Debt settlement is far effective than this. So why bankruptcy, when there is debt settlement program available.

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