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Mortgage Protection?
What is it and do I need it?

Generally the first introduction to protection is when taking out a mortgage.

Mortgage protection insurance is usually in the form of a decreasing term assurance policy. This is a policy that reduces in line with your mortgage (if a capital repayment mortgage) providing a cost effective lump sum payment on death to repay any outstanding balance.

So, who needs mortgage protection?

Potentially anyone with a mortgage. There are other forms of protection available such as income protection and critical illness and we are more than happy to advise on which would be the most suitable cover for you.

What are the benefits?

  • Tax free
  • Lump sum payment
  • Peace of mind

What can it be used for?

Generally the lump sum is used to repay the mortgage liability in the event of death. This can avoid the loss of the home for a surviving spouse/partner and or children.

What is the cost?

If you obtain your mortgage directly with a bank you will be offered their preferred providers insurers protection. Often this is cheaper if you seek advice from an IFA. An IFA can also provide advice regarding your protection needs, which your bank may not.

For example take Louise who had recently applied for a mortgage of £259,200 with her bank. Her protection cover, if taken with the bank would have cost £10.78 per month.

We were able to obtain the same cover for a reduced premium of £7.87 per month, a saving of 2.91 per month, £34.92 per year and nearly £500 for the term of the policy!

The biggest saving we made was in respect of Louise’s critical illness insurance – over £13 per month!

So, if you are looking at taking out a mortgage and want a protection quotation, or if you would like to review protection requirements give us a call.

Further examples

A healthy 30 year old male (non smoker) covering a repayment mortgage of £225,000 over a term of 25 years would incur a premium of £7.61. This is based on standard rates which are subject to underwriting. Going directly to the provider would incur a more expensive monthly premium of £10.44.