Mortgage Life Cover - Protecting Your Loved Ones

Taking our protection to ensure that your family would not be left struggling financially in the event of your death is essential. Life is hard after the loss of a loved one and this is a time when they do not want to be worrying where to get money from to pay monthly outgoings. One of the outgoings could be a mortgage, if you want to ensure that your family would be left mortgage free in the event that you passed away while still owing on the mortgage then you could consider taking out mortgage life cover.

Mortgage life cover is known as decreasing term assurance. The insurance can be taken by the policy holder insuring the remaining balance of their mortgage over the term left on the mortgage. As the name of the policy suggests the amount that you insure, which your loved ones would get back, would decrease in line with the mortgage balance as you pay off the mortgage each month. If you outlive the policy then the mortgage will be paid up and so no payment would be made. If you should pass away at anytime during the term of the life insurance your loved ones would get the amount left on the mortgage at the time of your death.

The cost of life cover would take many different factors into account. One of the things that will set the premiums is of course the amount you choose to insure. Your current age will also be taken into account when you take on life insurance as will any ongoing medical conditions. If for example you suffer from diabetes or asthma then you could expect to pay out more in premiums for life insurance. Your family history will also be taken into account and any illnesses taken into account. If you are seen to have a job that is dangerous then you could also expect to pay out more for your insurance. The same would apply to if you took part in any dangerous activities which could include such as flying and mountain climbing.

Of course mortgage life cover would only provide your loved ones with financial security in the event of your death for your mortgage. If you wanted to leave your family financially secure so they would have a sum of money in the event of your death to be able to maintain their way of life in general and any other outgoings they might have then you would need to give some thought to taking out a different form of life insurance. You might want to give some thought to taking out term assurance or whole of life insurance. Term insurance could be taken by choosing how much cover to take and how many years to take it over, if you passed away during this time your loved ones would receive a lump sum payment. If you outlived the policy it would expire and no pay out would be made. Whole of life can be taken by choosing how much life cover is needed and as long as you continue to maintain those payments your family would receive payment upon your death.

David Thomson is Chief Executive of BestDealInsurance an independent specialist broker dedicated to providing their clients with the best insurance deal on their home insurance, car and life insurance.

The Benefits of Using an Independent Mortgage Adviser

Types of mortgage advice

So what are the different types of mortgage advice and where would you expect to find them?

Non-advice

This type of mortgage broker offers the least consumer protection, they will simply ask a set of questions to narrow the customers requirements and thus filtering the number of mortgages available. They then present the customer with a small list of possible mortgages for the consumer to choose one appropriate. The consumer protection here is based on the script of questions the broker asks. The script is a process determined prior to the consumer appointment, and is impersonal. Therefore specific personal circumstances are unlikely to be assessed. It also assumes that the customers answers are factually correct and the final choice is made solely by the consumer. Although no advice is offered these brokers do handle the arranging of the mortgage on the consumers behalf, and therefore dealing with all the chasing and removing stress from the process.

Where would you expect non-advised brokers to exist?

Well believe it or not many non-advised brokers are within the high street banks and building societies.

Advice-only

This type of services is where a mortgage adviser uses their knowledge and skills to provide the most suitable mortgage to suit a consumers personal circumstances. This will involve a full fact finding interview, affordability assessment, discussion on the consumers future plans and aspirations, all of which provide key facts on a consumers requirements, and therefore a means for the adviser to identify suitable products. The adviser will not however, handle the arranging of the mortgage, and therefore the consumer would need to deal directly with the bank or buildings society to arrange the mortgage.

Where would you expect advice-only advisers to exist?

These advisers generally do not exist alone this is often a service provided through the 'Independent Mortgage Adviser' type below. And often comes about when the most suitable mortgage is only offered direct through high street (i.e. not through mortgage advisers/brokers). The adviser would therefore offer an advice-only option to the client and often charge a fee for this service. Although the client must deal directly with the bank or building society their mortgage adviser often provides support to the consumer.

Tied mortgage advisers

Tied mortgage advisers come in two forms 'only offering mortgages from one lender or its own mortgages' or multi-tied 'only offer mortgages from a limited number of lenders'. This clearly limits the number of mortgage products available to match a consumers personal circumstances and in a lot of cases they may not be able to offer the most suitable mortgage product and therefore advice may result in the best mortgage they can offer, being woefully inadequate.

Where would you expect tied mortgage advisers?

High street branches. A consumer calls into their local building society branch and their in house mortgage adviser can only offer mortgage products from that building society. Consumer choice and mortgage product suitability are considerably reduced. Whats more, high street branches often offer low mortgage rates/fees as a loss leader (marketing term to bring in business) and then try to sell their tied insurance products which are often also woefully inadequate and expensive.

Whole of market advice By far the best coverage these advisers can offer mortgages from all the UK mortgage lenders (having mortgage adviser/broker routes). The vast amount of mortgages available through these advisers is likely to cover the individual circumstances of a consumer. Whole of market mortgage advisers offer advice through conducting a full fact finding interview, affordability assessment, discussion on the consumers future plans and aspirations and then can arrange the mortgage through the lender thus alleviating the stress which comes when purchasing a house.

Where would you expect whole of market advisers?

These advisers are usually separate firms often found in the yellow pages or through the internet they are sometimes linked to estate agents. On an initial meeting mortgage advisers should declare if they are whole of market and this will be disclosed in the 'Initial Disclosure Document' they provide you. If you are not sure if an adviser is whole of market then ask them.

Independent whole of market mortgage adviser

Finally this type of adviser has the ultimate scope of the mortgage market, not only can they offer mortgage advice from the whole of market (lenders with mortgage adviser routes) but can also offer an advice only process if they identify a high street direct deal is more suitable. The 'Independent' statement indicates that the adviser must offer the consumer a fee based service if required. This means that rather than the adviser taking commission as payment for the mortgage advice, the consumer can opt for paying a broker fee and any commission is rebated to the consumer. The benefit of the fee based service is the consumer knows the adviser will not be swayed by higher commission mortgage products when selecting a suitable mortgage, however these days this is highly unlikely as the mortgage adviser must prove to the regulator why a particular mortgage is most suitable. Some occasions where the commission is quite considerable this would mean the consumer could receive more money than the broker fee paid and therefore would be better off taking the fee based approach.

Where would you expect to find Independent Whole of Market Advisers?

Like the author of this document Independent Mortgage Advisers are usually separate firms often found on the high street, yellow pages or through the internet and they are sometimes linked to estate agents. On an initial meeting an independent mortgage adviser would declare that they are whole of market and that they offer a fee based approach if required and this will be disclosed in the 'Initial Disclosure Document' they provide you. If you are not sure if an adviser is independent and/or whole of market then ask them.

What do independent whole of market mortgage advisers do for consumers?

The benefits of opting for an independent whole of market mortgage adviser include but are not limited to the following: -

Treat customers fairly.
Take time to gain key factual details of the consumers personal circumstances and aspirations.
Support and inform the consumer from initial enquiry right through to completion and beyond.
Provide an informed view on the housing market in general (price negotiation, leasehold issues etc).
Provide a individually tailored service specific to the customers needs, not a faceless "one size suits all" (non-advised) service.
Advise consumers to thing about their long-term interests as well as the short-medium term thus minimising risks.
Work for the consumer - estate agents, lenders and insurance providers have a different agenda.
Explain the features and benefits of different mortgage and protection options.
Free to act based on conscience and fairness as not usually directly targeted on specific areas.
Protect consumers data and privacy.
Provide general support during what is acknowledged to be one of the most stressful events in life.
Provide a knowledgeable "Ally" in what can be a very worrying process.
Provide proficient, impartial, examination of mortgage products.
Identify when specific lending criteria restricts consumers personal circumstances.
Expert guidance in complex scenarios (shared ownership/shared equity, right-to-buy, adverse credit).
Identify the potential lender in unusual situations, thus avoiding the need for multiple credit checks.
Select the best protection providers for consumers with health issues or unusual insurance histories.
Choose the most appropriate products, from the whole of market for each aspect of a consumers mortgage and protection needs, and thus increasing their ability to afford their commitments, even when things go wrong.
Highlight unusual exclusions on protection and general insurance products.
Ensure the provision of appropriate and customized protection products.
Quickly find an alternative lender if declined without wasting the consumers time.
Can arrange property insurance in ample time to be ready for exchange of contracts on purchases.
Encourage competition and innovation from lenders.
Assist in calculating affordability, ensuring that consumers can afford their mortgage and protection commitments, along with their other commitments.
Perform data input/entry for the consumer, reducing errors, omissions and most importantly non-disclosure.
Take responsibility for the advice and recommendation provided, thus increasing consumer protection.
Protect the consumer from corporate sales tactics used by some lenders and estate agency chains.
Understanding the urgency of some transactions and "go the extra mile" to meet deadlines.
Collate, verify and supply documentation for the lender, thus reducing delays in processing and expedite the process for the consumer.
Liaise with third parties in the transaction, tracking progress and any developments updating consumers throughout.
Use past knowledge and awareness to predict problems and resolve them in advance.
Act as advocate for the consumer during the application process.
Explain the mortgage offer and assist in fulfilling the offer conditions.
Can find appropriate lenders and insurers for unusual properties ( thatched roof, flying freehold flats etc).
Protect consumers from aggressive third-party marketing.
Often personally available outside of normal working hours to answer questions or resolve issues.
Care about consumers and provide an ongoing long-term service, often several generations of the same family.



Steve Wentworth formed his firm Wentworth Financial Services Ltd in November 2007 and has been in the Mortgage Industry since November 2002. Visit his website if your require an Independent Mortgage Adviser.

Top Ten Mortgage Companies

It is not very easy to top the list of the best mortgage companies in the country. You have to have the best service, a large network, and the infrastructure to maintain that kind of a reputation. The best top 10 mortgage companies according to the Forbes list are all giants in terms of mortgage. They have operations in many countries in the world. Let us take a look at some of them.

Citigroup

These guys top the Forbes list for the best top 10 mortgage companies. The company started in America and now has operations in 54 countries outside the U.S. Most of these are countries that have never used mortgage as a financing option. The annual revenue is estimated to be $108 billion.

The Bank of America

America's leading bank, it started to offer mortgage services and small loans and has now become a leader in credit cards as well. The Bank of America ranks second in the "best top 10 mortgage companies" in the Forbes List.

Wells Fargo

One of America's leading mortgage providers, they have an amazing network with more than 1000 branches across the country. Their revenue was estimated to be $33 million.

Wachovia´s

They are ranked fourth in the best top 10 mortgage companies. Since they have taken over the Western Financial Bank, they have increased their chances considerably to go higher up in the rating.

There are many other organizations as well--like BB&T, Golden West Financial, Popular, and M&T--who also are not quite far behind in the Forbes list of best top 10 mortgage companies.

Top Ten List of Bad Mortgage Lenders

When a person is in bad credit, it depicts to the world that he is not worthy of credit. If he tries to take a personal loan, banks and financial institutions will shut their doors on him. Only sub prime bad credit lenders will give him money but they will charge exorbitant rates of interest. However, he can avoid all these problems if he goes in for a mortgage loan. In this type of loan, the borrower has to give same asset as a security for the loan. If he defaults on the loan, the lender can sell the asset and use that money to realize the loan.

Mortgage lenders charge very reasonable rates of interest as their own risk is very less. Bad mortgage lenders may charge a small premium fee as compared the ordinary mortgage lenders as it is considered a huge risk to lend money to a person in bad credit. Forbes and various other agencies conduct surveys and compile a top ten list of bad mortgage lenders. Based on these data, let us analyze the names that are on the list.

Citigroup: The largest financial services company not only in America but in the entire world-this honor goes to Citigroup, whose assets exceed $1trillion. It has more than 200 million customers in more than 100 countries. It is largest issuer of credit cards in the entire world. It survived the great Depression, innovated itself in the mid-20th century and feel into a series of scandals in the early 2000s. Still, it holds its ground because of its unparalleled service and total solutions. Its major competitors are J. P. Morgan chase & co., Bank of America Corporation and Merrill Lynch & co. Citigroup has a still longer way to go. It has set its aspiration for a 75% increase in dividends. Only time will tell if this dream is to become a reality.

Citigroup tops the Forbes list as the best mortgage company for bad credit. One main reason for this is the unparalleled customer service that this company provides. This corporate giant has a large network of support to ease the application and use of mortgage loans for its borrowers. It has a great reputation that it preserves untarnished. It operates in moose than 54 countries apart from America. In 2006 alone, it had revenue of $108 billion and current assets of $1.3 trillion.

Bank of America: Next in line appears the Bank of America. It ranks second in the Forbes list. This is America's leading bank. It is a leader in offering mortgage services and small loans to its customers. It is not only the third largest American bank but is also a guru in credit card dealing. The best part in availing a mortgage here is

i) There is no application fee and closing fees here

ii) There is no need for private mortgage insurance

iii) it has close on-time guarantee and the best value guarantee

iv) Bank of America have 24/7 support to check application status and get real time status updates.

Wells Fargo Bank: Wells Fargo is the major American mortgage company. It has more than thousand branches spread across the world. Out of its' revenue of $33 million in 2005, mortgage lending contributed a major portion. As per the market cap, this bank is the 9th largest in the world and it is the 5th largest bank in America as per its assets. It has more than 23 million customers and nearly 160, 000 employees.

Wachovia: Wachovia is the fourth largest mortgage bank in America. They have a 25% discount offer on the origination fee if you use their online service. Wachovia assists mortgage-takers in every step from buying a new house to moving in. In fact, they have a 'Move Easy with Wachovia' program wherein you can avail their moving service at no additional cost plus you can even win a cash reward if you use their network real estate agent to purchase your house.

Golden West Financial Corporation: The third largest savings and loan corporation in America is the Golden West Financial Corporation. It has nearly 450 locations. This is one of the best and largest bad mortgage lenders in America. It focuses mostly on the individual home buyers. One small disadvantage of this company is its traditional nature. It is not quick in taking up and offering the zillions of other little products and services that other companies offer. But, still it has held its ground even in difficult economic environment.

BB & T: BB & T provides total financial solutions for everyone-right from student loan and home loans to loans for raising capital and financing businesses. They offer credit cards, insurance, merchant services and all. It is the nation's 14th largest financial-holding company and has locations in over 11 states at 1500 places including the Washington D. C. It has nearly 29000 employees to provide a total comprehensive service solution.

Popular: Puerto Rico's largest bank is Banco Popular and this is a subsidiary of Popular Inc., a bank holding company. It is the largest vehicle-leasing and daily-rental company of Puerto Rico and issues mortgages and other loans. It has seen a rapid growth in US in last few years and now stands as one of the leading provider's of bad mortgage loans.

After this appear M & T, Marshall and ILSLEY, Amsouth Bancorp and Synovus Financial. They find a prominent place in most of the lists of bad mortgage lenders. This list is neither accurate for all times nor is it comprehensive.

So, always shop around and get quotations from various lenders before choosing the lender who is best suited for your financial situation. Remember the business maxim 'caveat emptor' - 'let the buyer be aware' applies to mortgage loans too.

What is Mortgage Life Cover?

When it comes to life cover there are many different choices to make. One of the main types of life cover is called mortgage life cover. This is a simple life cover that allows you to pay off the mortgage to your home in the case of your death.

There is no question that death is hard on everyone affected, but it can be especially hard on the family members that are responsible for paying off your mortgage and other bills after you pass on. It is a worry that shouldn't be left with your spouse or dependents that may not have the money to pay off your mortgage. Not only could your death leave them with a huge burden, but if there are no savings or life cover in place, it could mean they could lose their home.

Mortgage life assurance pays off the remaining debt on your mortgage payments if you die within the life of the mortgage. As the years go on, the amount paid is decreased as your outstanding mortgage debt decreases. For example, if you die within the first few years of the policy the sum paid out will be significantly higher than if you died in the last year of the mortgage.

Mortgage life insurance is not the same as traditional life insurance because the payoff amount paid is specifically attached to your mortgage so there won't be additional monies paid to surviving family. It is however definitely worth having because it is not that expensive and can be combined with whole or term life to make sure your family is better covered in the case of your death.

Paul Eden is a mechanical engineer who recently purchased Life Cover and Critical Illness Cover to protect his family. He owns and maintains Cheap Life Cover [http://cheaplifecover.org], a resource for those investigating similar purchases.

Mortgage Life Cover For Mortgage Security in the Event of Your Death

Anyone who has a mortgage to repay over a span of many years needs to give some thought to taking out mortgage life cover. If you are the main wage earner in the family then you need to consider how your loved ones would cope when it came to paying the mortgage in the event that you as the main income provider died, so protecting them is essential. Without cover they might not be able to maintain the mortgage repayments and lose their home and with it they would be able to use the money from the cover to payoff the outstanding mortgage and at least not have the worry about losing the roof over their heads.

Mortgage life cover is usually known as decreasing life insurance. This means that the payout you would get back from the life insurance would decrease along with the mortgage. You would initially insure the mortgage balance when taking out a policy and as you payoff the mortgage each month you owe less. Therefore you would take out mortgage life insurance to reflect the number of years you have left to pay on the mortgage. If you die the amount left owing on the policy is paid out but if you outlive the policy then of course the mortgage would be paid off and there would be no payout.

This type of insurance is great peace of mind to safeguard and protect your family at a time when they need it the most. The cost of insurance would of course take into account the amount you chose to insure and other factors such as age and your health when applying for the policy. The younger you are usually the less life insurance will cost. Premiums will also take into account your family history health wise, for example if there is a history of heart attack or stroke in the family you would usually have to pay more for the policy.

If there are two names on the mortgage then you could take out a policy for both names. Usually you can insure to payout upon the first death and then cover would cease.

When looking for mortgage life cover you need to compare the cost of premiums from several different providers to ensure that you get cover at a price that suits your budget. One of the quickest and easiest ways of doing this is to allow an insurance broker to search around on your behalf. They will be able to gather insurance quotes which you can then compare in the comfort of your own home. When comparing the cost of life insurance always check the exclusions which should come in the key facts of the cover. Different providers add in different exclusions and these are what can stop a claim being made on the policy. It is essential when taking on the insurance that you always tell the truth, even if it means you would pay more for the cover, as if you are caught out then again a claim might be refused.

David Thomson is Chief Executive of BestDealInsurance an independent specialist broker dedicated to providing their clients with the best deal on their life insurance, critical illness cover and home and motor insurance.

Sorting Out the Mortgage Life Cover Plan For You

A home is often the biggest expense of many people's lives and is also typically one of the things which is most important to them. Because mortgages often take years and even decades to pay off, they can often cause headaches for borrowers. As such some people tend to be concerned about what would happen to their loved ones if they died and left a considerable amount outstanding on the home loan. This is what mortgage life cover has been designed to provide reassurance for.

All types of life insurance usually involve a payout in the event of the policy holder's death, and the cash can go to a close family member, but not necessarily a blood relative, so it can be a husband or wife. It can even go to someone like a business partner if you prefer, say if you have a mortgage taken out jointly with them for a business premises. Mortgage life cover is no different and will provide a sum of money to go towards paying off the balance of the mortgage on your death.

Mortgage protection like this normally comes in two different types-and this can depend on the exact type of deal that you have - ie a repayment or an interest only mortgage. Firstly decreasing term insurance is specifically geared to people with a repayment deal. The idea of this is that as the amount owed on the mortgage goes down over time so does the amount of payout guarantees by decreasing term insurance policy. This guarantees that the amount your family would get in the event of your death covers the outstanding balance.

The usual procedure is to take out a policy which covers the whole term of the mortgage itself, and then the cash is paid should the person die during its term.

Then there is level term insurance which is for people who have a repayment mortgage with the balance outstanding staying the same through the lifetime of the home loan and the repayments made only covering the interest. The amount insured remains the same through the whole life of this policy because the actual outstanding balance on the home loan says the same.

This means there is a fixed amount which does not change which is paid out in the event of the death of a policy holder. Both of these types of mortgage life cover may include terminal illness cover which will pay off someone's outstanding home loan in the event they are diagnosed with a terminal illness, rather than paying out on the actual death.

Then there is critical illness cover which can be added to all types of life cover including those related to a mortgage. Normally this will payout in the event that somebody is diagnosed with a serious but not necessarily fatal condition, such as cancer or multiple sclerosis.

Mortgage life cover is a straightforward way of helping to get peace of mind on what would happen to your loved ones if you died and left an outstanding mortgage balance. With plenty of insurers, not just mortgage providers, able to supply policies, there is always the chance you will get an effective and affordable deal.

David Thomson is Chief Executive of BestDealInsurance a completely independent specialist broker dedicated to providing their clients with the best insurance deal.
They offer great value life insurance as well as, critical illness and income protection, ensuring that their clients have the protection they need, without leaving a hole in their pocket.

A Decent Broker Will Help Find the Best Mortgage Deals

For the best mortgage deals, borrowers almost always engage the services of a trained and registered mortgage broker or financial advisor. The process of obtaining the right mortgage can be a long and complicated one and the sheer scale of the financial undertaking means that a trusted expert is a very important companion on the journey. The potential borrower should also acquaint themselves with the basics of mortgages and the mortgage market itself.

As with most purchases, the best mortgage deals will be found after a little shopping around. Although there are fewer products on the mortgage market than before the recent credit crunch, one can still find around 2,500 different kinds of home loans. A price comparison website is a perfect first port of call for anyone interested in the best mortgage deals, as it will swiftly compare the various interest rates and mortgage fees.

Although such first steps are a good idea, when it is time for the actual nitty-gritty of the mortgage sale to take place, it is best to hand over to the professional broker, who can not only hunt down the best mortgage deals but also increase the chances of a mortgage application's acceptance. This gives the borrower increased protection in the event of any mishaps.

Before engaging their services, the potential borrower should ask the would-be broker if they compare mortgage deals from a picked selection of the leading mortgage lenders or if they are "whole of market". The former type of broker works to find the best mortgage deals from within this selection, whereas whole market brokers - as the name suggests - make a more thorough search among all possible lenders. Although this increases the chances of getting the best mortgage deals, a "whole of market" broker will usually cost more than the other kind and the search will naturally take longer.

Mortgage brokers earn their pay in one of two ways: either by charging an upfront fee or by skimming commission from the final transaction itself. A commission-based broker tends to charge the client between a quarter and a half-a-per cent of the total value of the mortgage. If they are assisting a borrower with a bad credit history though, a broker may end up charging a full percentile.

A fee-based broker will charge the borrower, claiming up to 1 per cent of the mortgage value. Both kinds of broker have their strengths and weaknesses, but if you have the budget, engaging a commission-based broker who scans the whole market is the best chance of getting the best mortgage deals.

Standard Mortgage

The accepted definition of a standard mortgage is that it is a loan made in agreement with the underwriting criteria that follows generally accepted principles to qualified borrowers of any particular income level.

A standard mortgage is the traditional mortgage where there is no more than seventy to eighty percent loan to value. What loan to value or LTV means is that it is a lending risk assessment that lenders and banks use as a determining factor before approving a mortgage.

So, if the lender determines that the loan to value ratio is quite high then the lending risk is considered high. Thus, if the lender approves the mortgage, the person borrowing the money will face higher costs or they will have to buy mortgage insurance.

The traditional or standard mortgage is amortized over thirty, twenty, fifteen and ten years and payments are made monthly. In recent times, the biweekly mortgage has gained in popularity as it helps to pay down the mortgage quicker than the monthly payments do.

By the end of the mortgage, the homeowner will have saved quite a bit of money if they opted to pay the standard mortgage down bi-weekly as opposed to monthly.

One aspect of paying a bi-weekly mortgage that many homeowners may find difficult is that there are a couple of months when there could be three payments made, which of course can affect the cash flow of homeowners, especially young couples with their first mortgage. This is something to think about before agreeing to a bi-weekly payment plan.

Whenever you are securing a mortgage, you must always find out about any fees. In fact, always find out before you sign the mortgage documents.

With the current economic concerns around the globe, many lenders are now following stricter guidelines when it comes to lending out money, even for a standard mortgage. Therefore, it is harder for first time home buyers to actually get their first mortgage.

Mortgage Protection Life Insurance - Understanding The Basics

Your house is a big investment - probably one of the
biggest you're every likely to make. It is also the place
that you and your loved ones call home; a shelter and haven
from the outside world. That's why it is so important to
ensure that your home and family are protected in the event
of your death. It's not a topic that any of us like to
dwell on, but the sad fact is that should you die and the
family are no longer able to afford repayments on the
house, they will lose the property and the roof from over
their heads.

Having a good life insurance policy in place to protect
your property in the event of your death is vital. When you
die, your family will have enough to worry about without
the added stress of how they are going to hold on to the
family home. Your life insurance policy will ensure that
this problem is eliminated, with the mortgage balance being
paid in full upon your death.

The main types of mortgage life cover

The type of mortgage life insurance cover that you require
will depend upon what type of mortgage you have, a
repayment or an interest only mortgage. There are two main
types of mortgage life insurance cover, which are:

§ Decreasing Term Insurance

§ Level Term Insurance

Decreasing term insurance

This type of mortgage life insurance is designed for those
with a repayment mortgage. With a repayment mortgage, the
balance of the loan decreases over the term of the
mortgage. Therefore, the sum of cover with a decreasing
term insurance policy will also go down in line with the
mortgage balance. So, the amount for which your life is
insured should match the balance outstanding on your
mortgage, which means that if you die your policy will hold
sufficient funds to pay off the remainder of the mortgage
and alleviate any additional worry to your family.

With the decreasing term insurance, the cover is usually
taken out over the term of the mortgage, and payment is
made should you die during the term of the policy. Once the
policy has expired, it becomes null and void, so you will
receive nothing at the end of your policy if you are still
living. There is no surrender value on this type of cover,
but it does provide a cost effective means of protecting
your home and family during the life of your mortgage.

Level term insurance

This type of mortgage life insurance cover is for those
that have a repayment mortgage, where the principle balance
remains the same throughout the term of the mortgage and
the repayments made by the property owner cover the
interest payments on the mortgage only.

The sum for which the insured is covered remains the same
throughout the term of this policy, and this is because the
principle balance on the mortgage also remains the same.
Therefore the sum assured is a fixed amount, which is paid
should the insured party die within the term of the policy.
As with decreasing term insurance, there is no surrender
value, and should the policy end before the insured dies no
payout will be awarded and the policy becomes null and void.

Terminal illness benefit

Both of the above types of cover normally include terminal
illness cover, which means that the mortgage is cleared
should you be diagnosed with a terminal illness rather than
waiting until you actually die. This helps to ensure that
you do not have the additional worry of trying to meet
repayments when a terminal illness takes away your ability
to work and earn money, and at a time when the whole family
has enough to worry about without having to stress about
meeting mortgage repayments.

Critical illness cover

Critical illness cover is another type of insurance policy
that can be added on to either of the above mortgage life
insurance polices and provides an extra element of
protection and peace of mind. This type of cover can also
be taken out as a stand-alone policy, but usually proves
much better value if simply added on to a main insurance
policy.

With critical illness cover you will be eligible for a
payout in the event that you are diagnosed with a critical
illness. If you then go on to recover from the critical
illness, the payout is yours to keep but the policy becomes
null and void following your claim. The illnesses that are
covered by this type of policy are defined by the insurer
so you should ensure that you check the terms when taking
out critical illness cover.

Adding critical illness cover to your policy will only
increase your repayments by a small amount, but can provide
valuable protection if you are diagnosed as critically ill
and are therefore unable to work. With your mortgage repaid
from the payout of this policy, you will not have the
additional worry of trying to keep a roof over your head at
a time when you should be concentrating on trying to make a
recovery.

Summary

As indicated by the features of the two main types of
mortgage life insurance cover, the policy you go for will
depend largely upon the type of mortgage you have. Both
types of cover offer value for money, with some really low
cost deals available. Of course, the amount that you pay
will ultimately depend upon the level of cover you require.
For total peace of mind it is always advisable to go for a
policy with critical illness cover incorporated into it.

Having some form of mortgage life cover is essential to
protect your home and your family. After working hard to
buy your own property, the prospect of it being repossessed
in the event of your death can be worrying both for you and
for your family. A mortgage life cover policy will ensure
that this does not happen, and will give your family the
security of knowing that whatever happens they will still
have a roof over their heads.

Claire Bowes is a successful freelance writer and owner of [http://www.a1-life-insurance-quotes.co.uk] where you will find further advice and information on life insurance, critical illness cover, income protection and mortgage protection cover.

The Demand For Mortgage Life Cover

The demand for mortgage life cover is likely to come from your mortgage lender. Indeed, it is often made a condition of the mortgage advance that the borrower has sufficient life insurance in place to cover the mortgage. What does this mean in practice?

Why is it demanded?

When advancing a loan that is the size of the average mortgage, the lender is assuming a considerable risk - the risk that the money lent might not be repaid. Although there are many reasons why borrowers might default on their mortgage repayments, a very real difficulty is presented to the lender if the borrower dies before the maturity of the mortgage.

The idea behind life mortgage cover, therefore, is that, as a borrower, you take out a term life insurance, with the insurance term set to coincide with the term of the mortgage, and an insured amount equivalent to the outstanding balance of the mortgage.

How does it work?

If you die before the mortgage is fully repaid, therefore, the life insurance company pays out a benefit that is equal to the outstanding mortgage balance and the debt is paid off. The lender gets his money back and your family or dependants enjoy the security of continuing to live in the home which is now mortgage-free.

This kind of term life insurance even works with respect to standard repayment type mortgages. With these, of course, the amount outstanding to the mortgage lender decreases with each successive year, until it has reached zero at the end of the mortgage term. For these purposes, therefore, a decreasing term life insurance has been developed in which the insured sum payable on the policy holder's death decreases by a given amount with each passing year - so conveniently matching the rate at which the outstanding mortgage debt is also diminishing.

All in the lender's favour?

Some people might think that because mortgage life cover has been insisted upon by the mortgage lender, then it is something solely for the benefit of the lender.

As we have seen, it is certainly in the mortgage lender's interest to require an adequate level of life cover on the borrower's part.

However, it is also a considerable value to the borrower him or herself. If you have a mortgage and were to die before the debt is repaid, for instance, how might your family or dependants cope? Do you seriously expect that an alternative breadwinner from amongst your dependants might be able to step up to the plate and assume responsibility for the mortgage? Unless that is the case, of course, then mortgage life cover offers one of the few ways in which the roof over your family's head might be saved.

There is one form of insurance that does protect the mortgage lender alone, however, and that is mortgage indemnity insurance. It should not be confused with mortgage life cover. Mortgage indemnity insurance is a safeguard some lenders apply in the case of certain borrowers where there is a perceived higher than normal risk of repayments falling into arrears or default. The insurance ensures that the lender nevertheless recovers the outstanding balance of the mortgage. Even so, it is the borrower who pays the premiums for the lender's protection.

David Thomson is Chief Executive of BestDealInsurance a completely independent specialist broker dedicated to providing their clients with the best insurance deal.

They offer great value life insurance as well as, critical illness and income protection, ensuring that their clients have the protection they need, without leaving a hole in their pocket.