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Dying is not something people like to dwell on. But without proper mortgage life insurance, how would your family keep a roof over their heads?

If the worst should happen to you, the mortgage would still need to be paid – or your family may have to sell the family home to pay off the mortgage debt.

If you have mortgage life insurance in place, you may have peace of mind on this issue. After all, the insurance exists to step in and usually pay off the outstanding mortgage balance if you should die during the remainder of the term of your mortgage.

How does it work?

Mortgage life cover may typically be taken out at the beginning of a mortgage – although if you do not have any yet, you might typically be able to purchase this cover at any stage.

In exchange for your monthly premiums, you insurer may keep you covered against the cost of your outstanding mortgage if you:

• die; or
• are diagnosed with a terminal illness.

This kind of cover is typically also be called decreasing term life insurance. Tyically the amount of payout decreases along with the mortgage. Unlike a savings account or some other kinds of life insurance cover, your dependants may not receive a lump sum at the end of the term.

How much does it cost?

Companies may differ in how they put a price of their insurance. However, they may generally take the following issues into account:

• your age;
• your state of health;
• your postcode;
• if you are a smoker;
• how much your mortgage is for; and
• what you do for work.

In case you were surprised by that last consideration, life assurance companies typically consider some jobs to be more risky and therefore more dangerous to your health than others.

Check the details!

Finally, when filling in the application form for mortgage life insurance, you may wish to check that you have filled in all of the questions correctly. Failure to disclose anything, particularly a pre-existing medical condition, might result in the insurer failing to pay out when your family needs the money.