Family Protection Vs Mortgage Protection
Family protection, also known as level life insurance or whole of life insurance, pays out a lump sum upon your death; with level life term assurance it will only pay out if you die within the term agreed on your policy whereas a whole of life policy will cover you for your whole life and will pay out whenever you die. The main difference between the two types of life insurance, other than the term length, is the price of the premiums. A whole of life policy is generally a lot more expensive than level life insurance due to the fact that it is guaranteed to pay out. Furthering this, the longer your level life insurance term is the more expensive the cover will be due to the fact that it is more likely to pay out.
Another factor that may affect your premiums is any pre-existing medical issues you have or any dangerous hobbies or jobs that you may partake in. In short, the higher-risk the insurer views you as, the more expensive your premiums will be. In some extreme cases, you may even be declined cover due to your medical condition or other high-risk reason however we have access to the whole of the insurance market including mainstream and specialist providers so we will try our hardest to get you the cover that you need.
Mortgage protection, or decreasing life insurance, is designed to cover your mortgage debt once you pass away. Each year the amount of cover that pays out upon your death decreases as the policy ages, this is due to the fact that you will be paying off your mortgage and subsequently reducing your debt and requiring less cover. This may seem like a negative as you are losing money each year from your payout, however decreasing life insurance premiums are significantly cheaper than level life insurance and dramatically cheaper than whole of life policies. The amount of cover you receive is designed to decrease at the same level as your mortgage to enable your family to clear the mortgage debt. The only downside to this type of cover is that, as mentioned, the policy is only designed to cover the mortgage debt, so if you wanted to leave some money to your family for personal use as well, you would either need to increase the start amount of cover or take out another type of life insurance policy i.e. level term life insurance.
As with family protection life insurance, mortgage protection life insurance premiums will also be subject to your health and medical conditions, as well as other levels of risk you present to the insurer. If you have a pre-existing medical condition then you should expect your premiums to be higher than standard rates, and if you’re condition is severe then there is a chance that your application will be declined.
Each condition varies dramatically and the only way to know for sure if we can get you covered is for you to get in touch, if you would like to find out more call 0800 083 2829
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