Types of Mortgage Protection Insurance

In a recent survey by the Association of British Insurers (ABI), life insurance was found to be the most popular form of personal protection insurance and mortgage protection insurance. From the sample of working respondents over the previous six quarters an average of 47 percent held life and mortgage insurance policies.

Mortgage Life Insurance

Mortgage Life Insurance ensures that even when you die your mortgage will be paid back fully. You can purchase this insurance from the lender. The insurance premium is added to the mortgage payments. A borrower can only purchase it if he is aged between 16 and 64 years and avail the benefits till the age of 80. The two main types of mortgage life insurance available are level term insurance (used to protect an interest only loan) and decreasing term insurance (used for the protection of a repayment loan). Decreasing term insurance has been in less demand over the last few years as the number and proportion of interest only mortgage loans approved has subsided.

Mortgage Disability Rider

The mortgage life insurance is often provided with a disability income rider which ensures that your mortgage payments are made in case you become ill, injured or unable to perform your usual job. This rider provides you with monthly income after about 60 days of disability and you receive the payments throughout a year for each period of continuous disability. It is accessible to people aged between 18 and 64 years.

Mortgage loss of Employment Rider

This payment is added to your mortgage life insurance in case you become involuntarily unemployed. You can avail the benefits after 60 days of being unemployed and continue to get the payments for 9 months after each claim. Borrowers between the age of 18 and 64 years can access this insurance.

Mortgage Critical illness Insurance

This critical illness rider is added to your mortgage life insurance when you suffer from some illness. It helps to pay off your mortgage balance. You can purchase this insurance only when you are aged between 18 and 55 years and enjoy the benefits till the age of 70.

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