Mortgage Protection Insurance

Mortgage protection insurance is a general term for insurance intended to help protect your mortgage or household finances if an unexpected event occurs.

Depending on the type of policy, it could provide:

• A lump sum if you die
• A lump sum if you are diagnosed with a specified critical illness
• A regular income if illness or injury prevents you from working
• Short-term payments following accident, sickness or involuntary unemployment
• A combination of different benefits

The money may help repay some or all of the mortgage, maintain monthly payments or support your family’s other financial needs.

The precise events covered, amount paid and length of cover will depend on the policy.

The main forms of mortgage-related protection include:

• Decreasing term life insurance
• Level term life insurance
• Critical illness cover
• Income protection insurance
• Mortgage payment protection insurance
• Family income benefit
• Accident and sickness cover
• Unemployment cover

You may need one type of policy or a combination.

For example, life insurance could help repay the mortgage following death, while income protection could provide a monthly benefit if illness or injury prevents you from earning.

The appropriate arrangement will depend on your mortgage, family, income, employment, savings and budget.

Life insurance is one type of mortgage protection, but the terms are not identical.

Life insurance normally pays an agreed lump sum if the insured person dies during the policy term and the claim meets the policy conditions.

Mortgage protection can also include insurance for:

• Critical illness
• Long-term sickness
• Injury
• Loss of income
• Involuntary unemployment

A life insurance policy alone will not normally make payments simply because you lose your job or become temporarily unable to work.

It is important to identify the events you want to protect against rather than assuming one policy covers every risk.

Mortgage protection is not simply about selecting an amount equal to the mortgage.

MortgageKey can review:

• Your outstanding mortgage
• The mortgage term
• Your income
• Household expenditure
• Financial dependants
• Existing savings
• Employer benefits
• Existing insurance
• Your occupation
• Your health and lifestyle
• Your budget
• The financial effect of death or illness

We can then help you consider an appropriate combination of life insurance, critical illness cover, income protection or short-term mortgage payment protection.

All insurance applications are subject to underwriting, eligibility and the insurer’s terms. Cover is not in place until the insurer confirms acceptance and the policy starts.