Homeowners often fail to review their life Insurance when searching for the cheapest mortgage deal, but with both the cost of cover and their mortgage balance having fallen, many could make substantial savings just by switching life insurance providers.
Many borrowers with repayment mortgages are unaware that to ensure there is sufficient life insurance to repay their mortgage, life insurance companies assume an average interest rate for the life of the mortgage, often around 10%.
As many borrowers have not paid anything like 10% recently, and have made overpayments, their mortgage balance may well be significantly below the amount of life insurance cover.
This gives them the opportunity to reduce the level of insurance and save money, or with the cost of life cover now cheaper and competition stiff, get the same amount or even increase their cover for the same monthly outlay.
One L&C customer recently increased their life assurance from £390,000 to £423,000 to cover their new mortgage, but managed to reduce their premium, saving themselves around £130 per month.
L&C’s Richard Morea said:
The UK population is massively underinsured as a whole, so taking advantage of smaller mortgage balances and reduced premiums provides a great opportunity to make better provision for our families, without breaking the bank.
For more information and no-fee advice, life insurance policy holders should call free on 0800 0731932.
Via EPR Network
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