The main reason for mortgage protection Insurance is to make sure your family home would not have to be sold to pay off the mortgage to the bank. Most lenders depending on your age may insist you take out mortgage protection before they will give you a mortgage. Except in the case of an investment property although it is still usually advisable to do so.

The mortgage protection policy will pay off your mortgage if you die or if you have a joint or dual policy with your partner it will pay out if they die obviously depending how you have it assigned.

Mortgage protection is one of the cheapest life insurance policies you could take out, the main reason being that the amount of cover you have in place reduces, usually in line with your mortgage. The more expensive option is Term Insurance or level cover this is more expensive because the cover does not reduce but stays the same or if index linked will increase. You can also add serious illness on to the cover, meaning that your mortgage is covered if you are diagnosed with one of the serious illnesses specified in the policy conditions. The premium will obviously increase if this options chosen.

Should you wish to borrow extra on your mortgage, or extend the term of the loan, you will usually have to get a new mortgage protection policy. Your new premium is likely to be higher if you want more cover over a longer term and are older. You do not need a mortgage to take out mortgage protection insurance. If you're taking mortgage protection out for a mortgage you do not need to take it out with the mortgage provider and your lender cannot refuse you a mortgage just because you don't accept the policy that they recommended.

If you take out life insurance with your mortgage lender you can usually pay the premium as part of the mortgage in one payment however this policy may cost more than going to a broker or an insurance company. You may still need mortgage protection if you already have life insurance in place as the length of the policy or the amount of cover in place may not match that of the mortgage. Mortgage protection is designed to pay off your mortgage if you die, not to provide a cash sum to your dependants. It is usually a good idea to take out separate life insurance to provide a cash lump sum for your dependant family.

If the mortgage company is happy with your existing life insurance policy they may request you to have the policy assigned to them for the duration of the mortgage. This means you would agree to give the life insurance benefit to your lender if you died during the term of the policy.

Any policy benefit left over after paying off the mortgage goes to your estate. If you're total life insurance benefit is used to pay off your mortgage when you die, there will be no cash lump sum available for your dependants. It is usually better to have separate mortgage protection and life insurance as they tend to serve different purposes.

Before you take out the policy you should decide the amount of cover you think would be needed if you died this is known as the 'sum assured' or policy benefit. You should then decide how long you want to take the cover out for or the 'term' of the policy.

Generally, Mortgage protection policies will not pay out if:
Your death was caused by some medical condition that you did not disclose to them this is called anon disclosure.

Most insurance companies will not pay out for suicide if it was happens within one or two years of taking out the policy.