mortgage protection term

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margaret1

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A mortgage for 23yrs has a renewed protection policy for 20 yrs. The mortgage will be repayed well within the protection term. The bank have confirmed the responsibility is with the customer to ensure they have adaquate mortgage protection and do not require to view renewal policies.
Is the mortgage protected for the term of the policy regardless of the term of the mortgage? Any other issues that could arise?
 
Yes but if the loan is paid off early - say before 20 years, the residual reducung cover will be available in the event of a claim.
 
i would think there should be some sort of refund if you cleared your mortgage years early.
 
Why? Anyway there's not but you can cancel the policy and stop paying the premiums once the mortgage is cleared.
 
A lot of people initially opt for longer term mortgages to allow monthly repayments to be more manageable,however,in a some cases the term of the mortgage may reduce over the years by lump sums/increased repayments etc. When any years policy is due for renewal is there anything preventing someone taking out a mortgage protection policy for less years than their actual mortgage term (e.g. 20yr mortgage protection on a 30yr mortage),assuming they are confident they will have the mortgage cleared within the protection policy term?
 
margaret1 said:
When any years policy is due for renewal is there anything preventing someone taking out a mortgage protection policy for less years than their actual mortgage term (e.g. 20yr mortgage protection on a 30yr mortage),assuming they are confident they will have the mortgage cleared within the protection policy term?
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Mortgage protection is usually a condition of the lender required to pay off the mortgage in the event of death, is assigned to the lender and so the lender is not at risk. The life cover term must match the mortgage term. A lender therefore would not allow a shorter term on the life cover in order to safeguard themselves.
 
margaret1 said:
When any years policy is due for renewal is there anything preventing someone taking out a mortgage protection policy for less years than their actual mortgage term (e.g. 20yr mortgage protection on a 30yr mortage),assuming they are confident they will have the mortgage cleared within the protection policy term?
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If you reduce the effective term of the loan through accelerated lump sum or regular capital repayments then the lender may well be amenable to renegotiating the actual term of the loan and thus allowing you to put in place mortgage protection life assurance cover for the shorter term.
 
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