When you take out a mortgage you are getting the benefit of buying your own home, but you are also taking a risk. You must think what would happen if you were suddenly unable to derive income with which to repay this mortgage. Not only would you lose your home, but you would lose all the money that you had paid on it up to that date. Then there would be further costs in providing rental accommodation for yourself and your loved ones. The responsibility of the mortgage holder to pay those monthly repayments is a big one and not undertaken lightly by most people.
However there are steps that can be taken to cover such a risk and that is by taking out mortgage protection insurance. This should not be confused with the lenders insurance that is often a required part of a mortgage. Lenders insurance only insures the lender against the risk of lending you his money. It does nothing for you – except perhaps make it more likely that you will be given a loan in the first place.
Mortgage protection protects the person who is responsible for repaying the mortgage if for some reason he or she is unable to continue with the payments. The benefits of mortgage insurance are: –
• It will pay your monthly mortgage payments for various periods of time such as up to 36 months – depending on the type of mortgage insurance you get. This is a great help in times of need when you cannot meet the repayments yourself.
• It may pay a lump sum in certain circumstances.
• It can pay a death benefit lump sum if that is included in the policy.
• It may pay out the mortgage in its entirety.
Naturally, you will need to compare different mortgage protection insurances to be sure of getting those benefits that suit you best.