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Although it is not compulsory to protect your mortgage with life insurance and/or critical illness cover, it is strongly advisable.

When it comes to choosing the company to provide your life assurance cover it is nearly always the premium to be charged that will determine the company that you select.  This should not, however, necessarily be the case when it comes to Critical Illness cover.  There are differing definitions as to which critical illnesses are covered and to what extent.  With the advances in medicine it is likely that definitions will continue to be revised.  Therefore, if you already have a policy that provides critical illness cover you would probably be best advised to keep it, as it s likely to provide wider cover than a similar policy taken out today.  When considering the provider for Critical Illness cover look not only at the premium but the company’s claims history and the illnesses that are both included and excluded as well as the definitions of those illnesses.

There are two types of cover available to protect your mortgage - Level Term Assurance (LTA) and Decreasing Term Assurance (DTA).   LTA provides a sum assured which remains level throughout the term of the policy, whilst DTA provides a sum assured that reduces throughout the term of the policy – broadly in line with the reducing capital balance of your mortgage.  Most insurance companies use a formula whereby providing the mortgage interest rate is below 9% the sum assured will be sufficient to repay the mortgage.  Be aware that most companies do not categorically guarantee that the sum assured will be sufficient to repay the mortgage irrespective of the interest rate.

Since ‘A-Day’ (6^th April 2006) there has also been the option of using the new Pension Term Assurance options for the required life assurance cover (on either a level  or decreasing basis) – with the added benefit that premiums will qualify for tax relief.  Premiums are automatically paid net of basic rate (22%) tax relief and higher rate tax payers can claim the additional tax relief through their tax returns each year.  The radical changes to the pension rules now mean that almost anybody is eligible for one of these policies.  

If you know what cover you require please complete the quotation request form.  If you would prefer to discuss your options  please call us free on 0800 542 7720.

YOUR HOME MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON YOUR MORTGAGE.

Quotation Request

Is the policy to be held singly or  jointly with a spouse or partner?