Firstly it is a life policy that reduces in line with your mortgage repayments, therefore the amount insured will always pay off your mortgage.
When your property is paid for the policy will cease. It is a cost effective way of covering a large sum.
Secondly, you cover the monthly repayment with an Income Protection plan so that in the event of an accident or sickness that prevents you from working you can meet your monthly repayments and not put your property at risk.
What shall I do if I have an interest only mortgage?
In the current financial climate lots of people have taken out interest only mortgages, to adequately cover your self in the event of death you should take out a level term life policy. This means that it will always pay out the outstanding repayment on your home.
