life cover to pay off mortgage

angelicmandy

Hello all,

myself & my partner have been fortunate enough to have been able to pay of our mortgage recently after inheriting some money. However, im just wondering what to do about the life policy we took out when we first had the mortgage. We pay £15 per month to cover if one of us passed away we would get the mortgage paid. However as we no longer have a mortgage im not sure where we stand with this. Would we be able to have it changed to a normal life policy to pay out on either death & would we get back anything we have already paid into it? Weve had the policy for about 5 years

thanks for any advice/help :A

sirus21

Hi,
Congratulation on your windfall, it must feel nice to be mortgage free.

You really need to speak to your policy issuer directly. They will be able to talk you over your life insurance terms and offer the best advice.

It's my understanding that a life insurance policy and a mortgage are separate entity's.

What you effectively have is a term life insurance policy with a death benefit reducing monthly/yearly in accordance to your original borrowing profile. Even though your mortgage has been settled, your death benefit should still decrease incline with your original borrowing profile.
A professional life insurance provider will be able to advise on this.

Bigsmak

Have a close look at the policy you have. It will probably be a decreasing term assurance policy which means the amount you would get if you died will decrease each year in line with the Mortgage you have. (approximately).. If it is this it will have no 'surrender value', i.e you won't get anything back.

The policy and the Mortgage are two completely different things. If one of you dies you will get the value of the policy (at that time) and you can do with the money what you want.

If you want to cancel it there should be information in the policy documents to tell you how to do this. Its not difficult to do.

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On the other hand, I'd have a think about whether or not you would still need any life cover. Do you have children, what about funeral costs etc etc etc.. Do you already have other cover?

Its very easy to speak to a Financial Advisor about this, they will help you decide what kind of cover is needed.