Last modified: 10/08/2011
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Mortgage protection policies
It is a type of insurance policy, payable on the death of the mortgagor (the person who took out the mortgage).
It is attached to a particular mortgage.
On the death of the mortgagor, the policy will pay out. Typically, mortgage protection policies cover 100% of a mortgage, but this depends on the terms of the policy.
Even if a policy covers 100%, you should declare the outstanding mortgage value and also the value of the mortgage protection policy. If the policy covers 100% of the outstanding mortgage, these figures will be the same. The pay-out from the mortgage protection policy is added to the value of the estate, similar to many life assurance payouts.
During the probate process you should notify the mortgage protection policy company of the death. The company will tell you its requirements.
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