So you have your nice job, a bit of savings and you've managed to find someone to offer you a mortgage - no easy feat.
But one problem might linger: what happens if the main bread winner in the family should die?
What is mortgage protection life insurance?
If, for example, your family is reliant on a single salary in order to make the repayments you might want to add life insurance for a mortgage. This will make sure your mortgage can still be paid off in the event of your death.
It comes in three main forms.
1. Decreasing term mortgage
Throughout the course of the mortgage you'll continue to pay the same premiums. However, the amount you can claim decreases as you move nearer to the end of the term.
So, for example, should the worst happen shortly after you take out a mortgage worth £150,000, the insurance company would pay that back. Should there be much less left to pay - say £20,000 - then that's what the company pays out.
This form of cover comes with some of the cheaper premiums, but you should only take it out if you have a repayment mortgage which pays off capital as well as interest.
2. Fixed term insurance
This form is slightly more expensive, but in return the company will pay out a fixed sum regardless of how much is left on the mortgage.
So, if you take out a policy to cover £150,000 you'll be paid that much no matter when you need to cash it out.
Although it is a bit more costly, the big benefit of this option is that it leaves something left over, so your family will not only have the mortgage taken care of, but will have excess cash for all of life's other expenses.
3. Whole of life insurance
Finally, we have whole of life insurance policies. These stay with you not just for the entire term of the mortgage policy, but for the whole of your life. These are linked to investments which are used to replenish the fund.
This might seem to be relatively attractive, but the fund only pays out as long as the investments perform well.
Mortgage life insurance with critical illness
No product-type would be complete without a few optional extras thrown in for good measures. One of the most interesting is critical illness cover. With this option, you'll receive a payout if you suffer an illness or accident which renders you incapable of doing your job.
You can also add a waiver premium which enables you to stop paying your premiums if you lose your job.
Cost of mortgage life insurance
There is no easy way to calculate this as every mortgage life insurance quote will be different for each person. Companies, somewhat coldly, calculate premiums based on the risk of having to pay out - in other words, taking a look at your age, sex and health and making a judgement call on how likely you are to make it to the end of the mortgage term.
This means that some companies will refuse to cover some individuals based on certain conditions. For example some may not offer mortgage life insurance over 50, while others may exclude people with any ongoing health conditions.
By shopping around to compare mortgage life insurance cover you can always find a better deal, but you should always look closely at the small print. A cheap premium, for example, may well indicate limited cover. In the end you should base your choice on how much cover you want versus how much you want to pay out in your monthly premiums.
If you're looking for some cheap mortgage life insurance rates, use our mortgage life insurance comparison table to find the best deals on offer.