Mortgage Protection

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When drawing down a home-loan mortgage, the lending institution will often insist on the borrower putting in place a Mortgage Protection policy to cover themselves off in the event of the death of the borrower before the loan is discharged.

The bank will then receive the proceeds of the Life Insurance policy, as opposed to having to repossess the house. 

As distinct from Level Term Cover, with Mortgage Protection policies the 'sum assured' is reduced on an annual basis over the lifetime of the mortgage, usually at a nominal rate of 6% p.a. 

If set up by a couple, this policy is generally set-up to pay-out once on the first death.