Mortgage Life Insurance Question

jheskett89

Hi,

I think this is a bit of a stupid question but can't find a definitive answer for it in any guides! Here goes...

I am a first time buyer and will need mortgage life insurance. Question is for mortgage life insurance, when calculating a quote for the amount of cover required, should I just include the mortgage amount I am borrowing or should the figure also include the amount borrowed plus interest over the mortgage period?

So for example which one is correct to quote for:

100k (mortgage amount) OR 170k (100k mortgage amount + 70k interest)

Thanks for any help in advance!

James

Dan:_4

Mortgage insurance will clear the outstanding balance so I think you can just put the sum borrowed.

ACG

Assuming your mortgage is £100k and on repayment, you would take out a decreasing life policy.

Just to clarify the above, if a payout was made it would be made to the other person if a joint policy or the beneficiary/estate. They can then use the money for whatever they like - it does not have to be used to clear the mortgage, although that would usually be the sensible thing to do.

jheskett89

Thanks both! Just to clarify then ACG, take out a decreasing life policy on just the mortgage amount of 100k?

ACG

Im not saying you should or shouldnt do that - I will leave that to you or your advisor to make that decision.

But assuming its your mortgage you want to protect in the event of death then its the balance of the mortgage you are protecting, not the balance plus the interest.

Mortgage_Mark_2

Don't forget to add any fees, if you're doing so with the mortgage.

Also a very good idea to write in trust.