11. Mortgage Insurance

Question 1

PPI

Answer 1

Payment protection insurance

Insurance policy that will pay 100% of your mortgage (up to 2 years) if you’re unable to work due to:

• Sickness
• Accident or disability
• Redundancy

Question 2

What is ASU

Answer 2

Accident, sickness & unemployment

Similar to PPI but not just to cover your mortgage. Covers lost income due to:
- sickness
- accident or disability
- redundancy

Question 3

What type of mortgages require life cover?

Answer 3

Capital repayment
Pension mortgages
ISA mortgages

Question 4

What is a level term insurance

Answer 4

Life insurance policy suited to pension and ISA mortgages because capital does not decrease

Also has more cover on death

Question 5

What is critical illness

Answer 5

CI cover pays a lump sum on the diagnosis of any condition after a waiting period .

Each insurance company have their own list of illnesses

Question 6

Income protection (IPI)

Answer 6

Also known as permanent health insurance (PHI)

covers policy holder for a certain percentage of income should they be unable to work through illness/disability

Question 7

Buildings insurance

Answer 7

Insures the building against fire damage etc.

Lender might insist you have insurance before they borrow

Question 8

Home contents insurance

Answer 8

Covers the contents of the property from loss or damage

Question 9

Mortgage protection policy

Answer 9

If policy holder dies during term the sum insured is paid out

Usually equal to the loan - as the loan reduces so does the pay out