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Decreasing Term Life Insurance News » 2nd June 08 - Mortgage Life Cover

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Decreasing Term Life Insurance News » 2nd June 08 - Mortgage Life Cover

Decreasing Term Life Insurance News » 2nd June 08 - Mortgage Life Cover

You will be only too painfully aware how much the cost of your mortgage has increased since the recent credit crunch. With so many people struggling to pay their mortgages even when things are going reasonably well, it does not take much imagination to appreciate the financial difficulties you would bequeath your family if your untimely death left an outstanding mortgage to pay. Whilst it has never been more essential, however, the good news is that mortgage life cover has never been cheaper.

Mortgage life cover, of course, is a simple and straight forward insurance policy that will pay off the remaining balance of your mortgage if you die before it reaches full term. It can take the form of a level term life insurance – in which case the assured benefits are the same if your death occurs at any stage during its term – or, if you have a repayment mortgage, for example, it can be decreasing term mortgage life cover, with the benefits decreasing in line with the decreasing outstanding balance on the mortgage.

And the great thing is that although the cost of mortgage lending has climbed higher and higher recently, the cost of mortgage life cover – in keeping with all forms of life insurance – had actually come down. Industry experts estimate that the cost of life cover is some 40% less than it was five years ago.

To appreciate why mortgage life cover provides such an essential safety net, at a price that is surprisingly cheap given the protection it affords, you only have to look at what might happen if your family was not protected in this way.

If you were to die and leave an unpaid mortgage, of course the lender is obliged to treat your surviving dependents fairly and reasonably. The hash fact is, however, that the mortgage could not remain unpaid indefinitely and, in the absence of the necessary resources, your family could find themselves contending with the loss of the home through repossession.

In the present economic climate, there is nothing alarmist in worrying about such an eventuality. The Government’s own Ministry of Justice has recently released figure for the first quarter of 2008 which show that mortgage lenders made a total of 38,688 claims for repossession. This was 7% higher than the previous quarter and an increase of 16% over the past year – the highest rise since the early 1990s.

Clearly, this is not the climate in which you would wish to leave your family to founder in the event of your death and an unpaid mortgage.

In summary, mortgage life cover is essential if you are to leave your dependents with the roof over their heads in the event of your death before the mortgage is repaid. The good news is that:

Mortgage life cover has never been cheaper – its cost, in the light of the protection it affords, represents better value than ever;

You can choose between level term or decreasing life cover, as appropriate to the type of mortgage you have;

Adequate mortgage life cover will ensure that your surviving dependents have the necessary protection against a climate in which more lenders are turning to repossession proceedings.

The author of this life insurance article is Alan Knight.

This article does not represent ‘financial advice’ as each person’s individual requirements will be unique to their needs. If there is something in the article which you decide to rely on, then make sure you check those details with the person from whom you purchase any product or service.

The views in this article represent those of the author and not those of Netbasic Limited.