Mortgages For Everyone - Page 4

Below is a list of all the related insurance products you can choose to have alongside your mortgage.

Household Insurance Normally the only insurance that a lender insists that you have in connection with your mortgage is building insurance. As the lender is giving you money towards the purchase of the property, they insist that the building is insured so that, in the event of fire, subsidence or explosion, for example, they can get their money back by way of having the building restored to it's original condition.

Whilst not mandatory it is adviseable that you also consider insuring your home contents too. In doing so you are covered for fire, theft and for an extra premium, accidental damage.

Life Assurance It is also adviseable that you consider taking out insurance on your own life and that of your partner (if applicable). The following are the various options available to you. If you are unsure as to which one is most suitable for you, an independent mortgage broker will advise you on this aspect as part of the normal mortgage/remortgage process.

Term Assurance Life Insurance set up over a specific period, for example to correspond with the term of a mortgage. In the event of death during the life of the policy a cash tax free lump sum is paid out. (The policy is for life cover only and does not acquire a cash-in value at any stage.)

Level Term Assurance The amount of cover remains fixed at the same amount throughout the term of the policy. (usually used for family protection or interest only mortgages).

Decreasing Term Assurance The amount of cover gradually decreases throughout the term of the policy. (Usually taken out to cover a repayment mortgage where the amount of outstanding loan balance decreases over the mortgage term).

Critical Illness Cover Critical Illness Cover can be combined with level or decreasing term life assurance cover. Pays out a lump sum upon the diagnosis of a specified critical illness. Critical Illnesses include heart attack, cancer, stroke, multiple sclorosis, blindness, total and permanent disability etc. (1 in 4 men and 1 in 5 women will contract one of the conditions covered by a standard critical illness policy before they reach the age of 65 - source Henover Re 2001).

Terminal Illness If the person covered is diagnosed as having less than 12 months to live, the life insurance company pays out the amount covered there and then. This is automatically included in most level and decreasing term assurance policies. This should not be confused with Critical Illness cover.

Waiver Of Premium In the event of ill health and for a small additional monthly premium, the life company pays the policies premiums until you are able to return to work.

Mortgage Payment Protection Insurance (MPPI) This was previously called Accident, Sickness and Unemploment insurance (ASU). This type of policy provides insurance against any or all of these potential problem areas and would cover some or all of your mortgage payments.

Think carefully before securing other debts against your home. Your home may be repossessed if you do not keep up repayments on a mortgage or any other debt secured on it.