Mortgage protection Insurance explained
What is mortgage protection insurance?
Mortgage payment protection insurance sometimes known as Mortgage payment protection assurance is described as follows:-
“A type of Term Life policy which pays off the balance of a mortgage upon the death of the insured. Typically, the death benefit decreases according to a schedule that fits the declining payoff requirements of the mortgage.”
This is also another explanation:-
“This type of insurance is taken out by a borrower to cover the borrower’s loan repayments in the event that they are not able to meet them through specific events such as serious illness or redundancy. It is also sometimes called income protection insurance.”
- The most common way to protect a homeowner’s mortgage against death is a Decreasing Assurance Policy (DTA).
- Decreasing Term Assurance indicates that the sum assured decreases over the term of the policy. This is commonly used to protect a capital & interest repayment mortgage, where the outstanding balance reduces during the life of the borrowing.
- You can also protect your monthly mortgage payments against unemployment, sickness and accident disability with Mortgage Payment Protection.
- The policies usually pay out after a deferred period of 30 days after you stop working and then can pay out for 12 months if you are still unable to work.
- 55 per cent of all Mortgage Payment Protection Insurance claims are for unemployment, with 36 per cent for sickness and 10 per cent as a result of an accident. source www.qck.com
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