decreasing life insurance

chappers

Hi Folks

The property my wife and I live in is mortgaged solely in my wife,s name, we currently have a joint, level term life policy which pays out on the first death, if we took out a decreasing joint policy and I died would the policy cover the mortgage amount even though the mortgage isn't in my name.

Many thanks
Gareth

dunstonh

if we took out a decreasing joint policy and I died would the policy cover the mortgage amount even though the mortgage isn't in my name.

The money would be paid to your wife and she can then decide what she does with it. obviously, paying off the mortgage would make sense.

stephenni1971

if we took out a decreasing joint policy and I died would the policy cover the mortgage amount

Some companies do offer a Mortgage Guarantee so that if a claim is made you can be certain the payout will be sufficient to clear the mortgage.

With the rest you choose an assumed interest rate and this determines the rate at which the level of cover decreases.

Choosing a high rate assumes you will pay off the loan at a slower rate and cover drops gradually.

Choosing a low rate assumes you are paying of the debt faster and therefore the cover will decrease at an increased rate.

I normally use a rate of 10%.

chappers

Many thanks the Aviva policy in question does say it has a mortgage garauntee, I was just wondering how this would work as the mortgage is not in my name.
i will make an appointment with my FA ,but just wanted to get some info on how it all works first.