Mortgage Life Insurance
Life insurance that pays out to cover your mortgage will give you peace of mind, knowing that your home will be secure in the event of your death.
Do you need Mortgage Life Insurance?
Mortgage life insurance will pay off your mortgage in the event of your death, securing your home for your family.
If you think your family would struggle to make mortgage payments if you were to die, life insurance could protect them from financial hardship during what's already one of the hardest periods of their lives.
If you're confused about life insurance, we've written some quick guides to help you out.
What type of cover do you need?
There are two types of life insurance for mortgages. Which one you choose depends on the type of mortgage you have and whether you want to leave any additional money behind for your family.
Decreasing term life insurance is designed for repayment mortgages. The amount you're insured for decreases as you pay off your mortgage.
Term insurances are designed to last for a set number of years that you can choose. Most people choosing decreasing term set their policy to last until their mortgage has been paid off in full.
After the term ends, unless you take out another policy you will no longer be insured and your family won't receive a pay-out if you die.
Level term life insurance is used to protect an interest-only mortgage. As you're only paying the interest off your mortgage, the mortgage amount will remain the same, as does the amount of cover. Due to this, premiums tend to be more expensive than decreasing term.
As a term insurance it protects you for a set number of years. Depending on your circumstances, you might take out cover until your partner's retirement date or perhaps when your youngest child reaches 18 and becomes less financially dependent on you. When the term ends, you will become uninsured.
Would I be better off with a regular life insurance policy rather than a mortgage life insurance policy?
Mortgage life insurance is simply another way of describing a decreasing term policy.
Taking out a level-term rather than a decreasing-term policy could leave extra capital behind in addition to paying off the mortgage.
How can I calculate my cover?
How much mortgage debt do you have?
Most people choose cover the decreases in line with their mortgage payments. The starting cover amount should be the same as your mortgage debt.
What is the length of your mortgage?
To provide the most protection, ideally your life cover term should last until the day you pay off your mortgage in full. If the premiums prove too expensive, consider adjusting to the maximum term you can afford.
What type of mortgage do you have?
Decreasing term life insurance is designed for repayment mortgages. If however you have an interest only mortgage, a level term policy that pays out a fixed amount may be more suitable.
If you have any further questions, don't hesitate to call the Protected team on 0800 524 4153.
What is joint mortgage life insurance?
If there are two names on your mortgage contract then you may be wondering if it is better to have a joint life policy or to keep two single policies.
Joint policies pay out upon the death of the first person only, leaving the second person uninsured. The second person may find it harder or more expensive to become insured later in life because of their age or health problems which could have developed.
Surprisingly, having two separate policies can actually be cheaper than joint mortgage cover. Our team of life insurance experts can help you make the right decision and find a policy that's right for you and your partner.