As the name suggests and in a nutshell, life insurance is a type of insurance which is paid out in a lump sum in the event of your death, this is designed to give your loved ones and dependants financial security after you are gone. The amount paid out depends on the type of insurance you get and how much you pay in, this form of insurance can be used to pay for specific things in the event of your passing, such as mortgage and rent payments or an inheritance for your family to use as they see fit.

 

There are various life insurance types including;

 

Joint Policies

A joint life insurance policy is most commonly used for a mortgage and ensures the mortgage will be paid in full if one of the policy holders passes away.

 

Whole of Life Policies

This type of policy covers you for the rest of your life and will pay out at any time providing the payments have been kept up with in full.

 

Term Policies

This type of life insurance policy runs for a set term; 5 years, 10 years or 25 years for example, and will only pay out if you were to pass away during this term.

 

A life insurance policy is a good choice if you have dependent children, a spouse who relies on your income to live or you are responsible for paying the mortgage for your whole family. The cost of life insurance also varies heavily depending on a number of factors, your current state of health, whether you smoke, family medical history or whether you have a job which is a high safety risk. Any ‘negatives’ on these factors will cause your insurance premium to go up in price.

 

Life Insurance and Mortgages

While it is not always compulsory to take out life insurance when you take out a mortgage, it is a good idea to protect your dependants should something happen to you and some lenders might factor this into their lending terms and conditions. It is wise to check the terms and conditions of your chosen lender to see what they expect of you regarding life insurance or mortgage protection.

 

If you would like to discuss mortgages or life insurance with one of our experts, we would be happy to chat with you about the different options to help you come to the best decision for you. Contact our team here.

 

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