Due to the growing expansion of the mortgage industry and the use of it by users to buy or improve a house, the importance of awareness benefits of mortgage life cover has increased. But borrowers are not aware of the benefits and limitations of mortgage life cover. They can not choose the best options according to their needs and circumstances. This is because this type of insurance has many complexities. It is better for borrowers to seek the advice of a mortgage life cover broker. That’s why using the advice of a mortgage life cover broker is so important.
The Importance Of Mortgage Life Cover
When applicants borrow from banks or credit institutions to buy or build a house or make ends meet, the borrowers and the lenders are usually concerned about what will happen if the borrowers die and what the survivors will do.
Insurance companies in the form of mortgage life cover and solve problems and such concerns, in case of death of the insured (borrowers) during the insurance period (mortgage), pay the remaining instalments. Insurance companies pay the rest of the mortgage instalments from the date of death until the end of the mortgage period together in the name of the bank or lending institution (insurers). Therefore, credit institutions or banks sell these policies to the borrowers to repay the mortgage given to applicants and avoid debt settlement problems for the survivors.
However, they can also have additional coverage, such as the capital increase in the event of death and exemption from insurance premiums and permanent disability. Therefore, due to the nature of mortgage life cover, using mortgage life advice in all evaluation stages, comparison and selection of products and insurance companies are very important.
Because the number of premiums and conditions of using this type of insurance has many complexities, therefore, in this regard, it is recommended to use the advice of a life cover broker to get the most out of the benefits of this type of insurance, considering the various variables affecting this insurance policy.
How Does Mortgage Life Cover Work?
As mentioned above, the mortgage life cover reduces the survivors’ worries about the financial consequences of the insured’s death. The survivors will no longer have to worry about repaying the remaining instalments of the insured person’s mortgage, and the insurance companies will undertake to repay the mortgage instalments. The most important functions of this policy are:
- Facilitate the payment of mortgages by banks and financial institutions
- Resolve the concerns of the borrowers and the lenders about their sudden death and bank debts
- Provide peace and comfort for the deceased survivors
Features Of Mortgage Life Cover
To buy a house, you must be familiar with the features of this insurance policy. This insurance policy has several features, among which are as the following:
-
Period –
The period of using the life cover is limited to the repayment period of the mortgage instalments. Moreover, the cover will not have any benefits for the survivors after repaying the mortgage instalments. In other words, the benefits of the coverage are depreciated over each period of mortgage repayment.
-
Benefits –
The insurance company will pay the remaining unpaid mortgage instalments from the time of the insured’s death. And, no other amount is paid to the survivors.
-
The premium is calculated based on the amount of mortgage get, the age of the borrowers and the mortgage repayment period.
-
Insurance coverage –
If the insured person suffers death or disability during the mortgage repayment period, the survivors will no longer have to worry about repaying the remaining mortgage instalments and the insurance companies the remaining instalments they will repay the mortgage.
-
How to pay –
the borrowers have to pay the mortgage life insurance premium in a lump sum.
-
Mortgage limit –
The insurance company considers different rates and conditions based on the type of mortgage, the age of the borrowers and the mortgage repayment period. Some insurance companies set limits on the high premium plans, while others set a certain limit on mortgages.
-
Type of liabilities of the insurance company –
However, some insurance companies only commit to repaying the instalments related to the mortgage principal. Also, do not guarantee interest and repayment of the mortgage interest. However, others also undertake to repay the principal and interest of the mortgage. This also applies to deferred instalments and late payment fines. This is especially important when it comes to long-term mortgages.
-
Terms of liquidation and termination of the insurance contract –
If the borrower settles the mortgage earlier, he can request the insurance policy’s termination. Based on this, the insurance company calculates the returned insurance premium and pays it to the borrowers. However, some insurance companies do not accept these conditions and impose restrictions.
The Importance Of Using Counselling In Mortgage Life Cover
Given the complexities of life coverages in terms of time, benefits, calculating premiums, insurance coverage rates, insurance companies payment methods and restrictions and lenders, the use of expert advice of a mortgage broker is very important.
SWG Mortgage specialist advisors have sufficient experience in terms of rates, conditions of insurance companies and lenders. They can give you the best life cover advice. Using our advisors, you can choose the best option from the available options. SWG Mortgage specialist advisors will help you take advantage of this type of insurance according to the needs and conditions of the mortgage and the insurance company rates and conditions.
