Mortgage Life Assurance

A life policy to neatly cover the cost of your mortgage

Mortgage life assurance is a special type of life policy- it’s a decreasing term policy because the amount covered goes down as the mortgage gets paid off; and therefore also has no value at all once its term is completed. It’s also cheap!

Mortgage life assurance is a special type of term insurance. The family of products called term insurance are so-called because they only offer you life cover across a specific time period (the term). After the term is up, you’re no longer covered, and you won’t get any money back.

Not surprisingly, in the case of mortgage life assurance, the term in question is the length of the mortgage. These policies are generally remarkably cheap (certainly compared to the cost of a mortgage!) because they’re designed only to cover you for the balance of the mortgage- your mortgage life assurance won’t give your family a lump sum to survive on if you die. In fact, your family won’t get anything except for the property. If you die, the policy will pay off the remainder of the balance outstanding on the property to the mortgage company.

Indeed, in most cases, you cannot take out a mortgage without proving to the mortgage company that you have some form of life cover attached to the mortgage policy.

This brings us to the other key aspect of mortgage life assurance: it’s a decreasing term policy. Because the capital value of the repayment on your property falls across the life of a mortgage, so too does the required benefit payable on your death covered by your mortgage life assurance policy. This may sound complicated, but the net effect is that these policies are fairly economical, highly competitive, and easy to purchase.