Level Term
Life Insurance
Life Insurance
Life cover for your mortgage
Getting started with level term life insurance
Protecting your loved ones financially is one of the most important steps when planning for the future. Level term life insurance offers a simple, reliable way to ensure your family gets the financial support they need should you die within your mortgage term.
What is level term insurance?
Level term insurance is a type of life cover that provides financial protection for your loved ones by paying out if the life assured passes away during the policy term. Therefore, each person responsible for the mortgage requires protection. The payout you’d receive from your insurer stays the same throughout the policy, no matter when a claim is made.
This means you or your loved ones could use the money to help pay off your mortgage or other debts.
Because the payout doesn’t reduce over time, the premium for this type of insurance usually costs more than decreasing term cover. But it could still be the right choice for you.
How does level term insurance work?
Level term insurance covers a fixed sum equal to the mortgage balance, typically used alongside an interest-only mortgage as the balance does not reduce over the term neither does the sum assured.
If a valid claim is made during the policy term, your chosen beneficiaries would typically receive the full payout amount. The policy does not have a ‘cash-in value,’ so it simply finishes at the end of the term.
You can also combine this insurance with other types of cover, like Critical Illness Cover and Income Protection, to give you and your family even more financial security.
How does level term insurance work with your mortgage?
Level term insurance is a good option for many people, but especially if you have an interest-only mortgage. With this type of mortgage, your monthly payments only cover the interest, not the capital loan amount.
That means when the mortgage ends, you still owe the full amount. Level term insurance helps by providing a fixed payout that covers this if you or another policyholder passes away during the policy term, so your family won’t be left with the debt.
You may choose not to redeem your mortgage with the policy benefits. The payout from the level term insurance could also be used to:
- Provide income replacement
- Fund future expenses like education or childcare
- Leaving a fixed inheritance
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What are the benefits of choosing level term insurance?
There are several reasons why level term insurance might be the right choice for you:
- Ideal for interest-only mortgages
- Provides peace of mind for your family’s financial future
- Can be tailored to your specific needs and budget
- Policy can be written in trust
Do you need life insurance for your mortgage?
While life insurance isn’t a legal requirement for getting a mortgage, it is advisable. If you’re the primary income earner or split the mortgage repayments with a partner, level term insurance ensures no one will be left struggling to pay the loan.
If you have an interest-only mortgage, where the loan amount doesn’t decrease over time, level term insurance ensures the full loan can be repaid.
How much does level term insurance cost?
The cost of your policy will depend on factors such as your age, health, lifestyle, policy amount and term.
How do I choose the right life insurance policy?
Speak with one of our advisers, who will assess your needs and circumstances and can recommend the most suitable cover for you.
Choosing the right life insurance
An alternative option to level term life insurance is decreasing term insurance. A smart, affordable way to protect your mortgage. As your mortgage balance reduces, so does your cover, so you only pay for what you need.
Talk to an expert
Speak to one of our specialist advisors today to find out more about the insurance policies we offer, and how MFB can help you secure the best mortgage protection.
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