Mortgage Life Insurance
Mortgage life insurance is typically the same thing as decreasing term insurance, but the term could also apply to level term insurance so it is important to distinguish between the two products.
Decreasing term insurance will decrease in cover over its term assuming a notional interest rate usually between 8 to 10 percent.
This means it will almost always guarantee to repay the full balance of the mortgage on death.
Some policies will guarantee this from the outset, some will not, so it's important to check this with your advisor.
Decreasing term insurance is therefore usually used to repay a repayment basis mortgage. However, if you have an interest-only mortgage with a repayment vehicle arranged, you could opt for decreasing term cover to reduce costs.
In the event of a claim, there may be a shortfall if the investment plan is behind target. A level term insurance policy will provide a flat level of cover for the entire term of the policy so they are usually relevant to those on an interest-only mortgage, or borrowers who would like a surplus left after repaying the mortgage.
It's also important to distinguish between insurance and assurance: life insurance is a protection product with no investment element.
If you survive beyond the term there will be no return from the policy.
Whole of Life Assurance is an investment product, the policy is assured because it runs for the whole of life, and will therefore always pay a return.
We do not arrange investment products however, so, should an assurance policy be more suited to your requirements, we can arrange for a financial advisor to assist you with this.