Life Insurance is a vague term as it covers much ground; there are several different types of Life Insurance, so this mortgage protection guide will explain to you what it is and why life insurance is essential to take out for any homeowner.
If you’re looking to take out Life Insurance, it’s worth speaking with a Mortgage & Protection Specialist expert in Sunderland. We offer Life Insurance Advice in Sunderland, and we would advise that you take the Free Insurance Consultation that we provide to new/existing customers before making any drastic decisions as it may not match your circumstances.
Particularly if you don’t know what you are doing, there are many different types of life insurance. It can get complicated, and you also need to understand which is the best-suited policy that covers you best and how long the policy lasts.
Life Insurance pays out a lump sum of money in the event of death. The money gets passed down to a family member or friend. In the event of a claim, the person who takes out the cover can choose to either pay out the whole sum insured at once or through regular payments.
🏠 Life insurance was introduced to provide:
🏠 Financial support for family members.
🏠 Replace lost income.
🏠 Pay off any outstanding debts owed in the person’s name.
The sum that is paid out changes depending on the type of cover that got taken out. Thankfully with Life Insurance, you can choose how the payout gets distributed. You select your specifics; for example, you may only want the money to get used to cover the remaining debts on the mortgage.
There are lots of various types of Life Insurance policies. It would be wrong to think of Life Insurance as just an “either/or” choice, as many people now have one or more of the different types of cover. Affordability plays a large part, and whilst it would be fantastic to cover yourself for every potential opportunity, that’s not always possible.
Here we have listed the different type of Life Insurance available. However, to find out more, speak with one of our Dedicated Protection Specialists Advisors in Sunderland today.
With Level Term Life Insurance, you will still get a payout. However, you will only get covered for a fixed ‘term’. This policy only pays out if you die within your policies term. They usually run between 5-25 year terms in 5-year increments.
Term Life Insurance is often used to cover a mortgage. People usually take out this policy that’s in line with their mortgage term. Therefore, if you were to die and still have your mortgage to pay off, the policy will pay out the This means that the mortgage payments will not fall to family members or any other name attached to the mortgage.
As a Mortgage Broker in Sunderland, we’ve found that this type of Life Insurance policy is the most popular. You may be asking, “why would you want to take out a policy that decreases in value?”. Well, this policy is targeted at homeowners with repayment mortgages – which is the majority of people. This policy is usually taken out to pay off the outstanding mortgage balance should you die.
The policy’s value mirrors the outstanding balance remaining on your mortgage. As the amount owed on your mortgage decreases, so does the sum insured.
Decreasing Life Insurance is typically taken out alongside other Insurance products depending on personal circumstances. This is why we always recommend speaking to a Mortgage & Protection Specialist in Sunderland, and we can help recommend the most suitable insurance for your needs.
This type of Life Insurance policy will still payout if you die within your fixed term. It works in the opposite way to Decreasing Term Life Policy.
The difference with Increasing Term Life Insurance is that you are covered for increases as your term goes on. It will increase by a fixed amount until your policy term ends.
This type of Life Insurance was introduced to protect the policy’s total value against inflation and is usually in line with the retail price index.
As a Mortgage Broker in Sunderland, we’ve learnt that the Whole of Life Insurance policy is not at the forefront of the insurance market. However, it is still helpful, and it may be the policy that suits you most.
The Whole of Life policy is the cover that lasts your whole life. When you die, the policy that you took will payout. The costs of Whole of Life Insurance will be a little more than a Level Term Life Insurance. However, you are covered for your whole life and not just a fixed term. Assuming that you’ve kept up-to-date with your life insurance payments, your cover will apply for your entire life.
This type of insurance is usually used for family protection and part of inheritance tax planning.
If you are in a relationship/married, you could consider taking out a Joint Life Insurance policy that will payout in the event of one of you dying. You could still have two separate Life Insurance policies if you want to. However, having a Joint Life Insurance policy is often cheaper than taking out two different ones.
This policy works because if one person dies, the policy pays out and then ends. This may seem like a downside to the policy, but if you initially took out the policy to pay off your mortgage, you would still be able to do so as the money will be released after the death of one of the policyholders.
This type of Life Insurance cover may be offered to you by your place of employment. Your company is not obligated to provide Death in Service cover. However, some do as part of their employee benefits package.
Death in service is usually a lump sum of cash paid out to an employee’s family or a person of their choice if they die. This sum can be up to 5 times their annual salary. There are no specific limitations on what can be done with the employee’s money.
Just because you are a single homeowner doesn’t mean that you should disregard all Life Insurance options.
If you have settled into a new place and are currently living on your own without children or a partner, it’s not unusual for people to forget about life insurance. People also sometimes choose to ignore it, and this is because it doesn’t always apply to single homeowners.
What you should think about, though, is that your circumstances could change in the future, and if they do, then Life Insurance could become an essential thing to have.
Please speak to one of our Mortgage Protection and Insurance Specialist in Sunderland and determine whether taking out Life Insurance as a single homeowner could be beneficial for you.
We want to make sure that you have the right policies in place to allow you to leave your family in the best position possible if you die. Taking Life Insurance will give your family financial certainty and will take a little stress off them in an already difficult time.
As a Mortgage Broker in Sunderland, we know that Life Insurance, no matter the type of cover, is highly beneficial and can put you at ease knowing that your family won’t have to pay for your debt payments.
If you want to find out more about Life Insurance, take up our free Insurance consultation in Sunderland. We will explain the policies available to you and why they could benefit your family’s personal and financial situation in the future.
But don’t just take our word for it, look what our customers have to say about our staff. Just like our mortgage protection and specialist Mizan:
We always ask our customers to review us. We do this because our reviews reflect a complete picture of our service from start to finish and highlight how amazing our team is.
As a Mortgage Broker in Sunderland, we’ve found that Life Insurance is typically taken out in combination with other policies, depending on your situation. The other Insurance options are:
🏠 Mortgage Protection Insurance Explained
🏠 Income Protection Insurance Advice in Sunderland
🏠 Critical Illness Insurance Advice