Is the price I'm quotes the price I will pay ?

"Around half of all Life Insurance is sold to support a Mortgage. So it's important to understand which type of Life Insurance policy you need. This article provides an insight", says Charles Challiner spokesman for Lloyds Insurance Underwriting.

Life Insurance & Mortgages

When you get a mortgage you will probably be advised to take out Life Insurance which will repay the outstanding mortgage if you were to die. Indeed, some mortgage lenders make it a condition of the mortgage.

However you should be aware that the Life Insurance sold by Building Societies and Mortgage Lenders is often up to 40% more expensive than identical insurance purchased from Moneyquest.

Do you have a 'Repayment' Mortgage?

If so, the value of your outstanding mortgage decreases over the years as you steadily pay off your mortgage. Therefore, each year you need a lower level of life insurance to cover the repayment of your mortgage. In these circumstances you need 'Decreasing Term Life Insurance', more commonly known as Mortgage Life Insurance.

With this type of policy the sum insured automatically decreases along with the repayment of your mortgage and the insurance finishes on the date that you are contracted to have fully repaid your mortgage. The length of time between the start and the end of the policy is called the policy's 'term'.

Do you have an 'Interest Only' Mortgage?

With an Interest Only Mortgage you are only paying off the interest on the capital you borrowed. Therefore, the outstanding value of your mortgage always remains constant. Consequently, you need a life insurance policy that provides a constant level of cover throughout the policy's term. You therefore need 'Level Term Life Insurance', which is the standard form of life insurance.

Please Note: The outstanding value of a mortgage is never affected by inflation. Therefore, you do not need to worry about inflation proofing (i.e. index linking) your policy.