How can I protect my home?

If you are considering protecting your outstanding mortgage debt with a life insurance policy, the first thing you need to know is what type of mortgage you have as this will determine what type of plan is most suitable to your needs.

You need to make sure your life insurance policy and mortgage match, otherwise you risk undermining your cover.

If you're repaying both the capital and interest on a loan every month you have what's called a 'repayment mortgage'. With this type of mortgage, by the time you finish repayments you will have repaid all the money you borrowed, with interest.

For repayment mortgages you would usually use a decreasing term assurance plan. The amount payable on death from this type of plan decreases every year in line with the decreasing amount you owe to the bank.

If you repay just the interest on your outstanding mortgage debt then you have what's called an, 'interest only mortgage'. Because you don't pay back the money you borrowed for your house until the end of your mortgage repayment term, you would usually have an investment savings plan designed to accumulate sufficient capital to repay the loan at the end.

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