Critical Illness and Life Cover for Mortgage [Get Online Quotes]

Q: Joint life and critical illness cover for a mortgage

If you’re buying a home with a partner, taking out a joint life insurance with critical illness cover policy instead of two singular policies, could be a cheaper option to help cover mortgage payments. With a joint policy, only one pay out is made, either; on the first death/ diagnosis (of a critical illness), in the policy term. However, individual cover can offer more flexibility and would provide two separate pay outs, due to being two separate policies. Ultimately, if a joint cover option is for you, will be down to your own personal preference and needs.

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Life and critical illness cover
Critical illness and life cover for mortgage

Do I need critical illness and life cover for a mortgage?
What Is mortgage life insurance?
What is critical illness cover?
What’s the benefit of having critical illness cover and life insurance to protect a mortgage?
Joint life and critical illness cover for a mortgage
How much does life and critical illness cover cost?
Is life insurance mandatory for a mortgage in the UK?
What’s the difference between life insurance and mortgage insurance?
Should I get critical illness cover with my life insurance?
How long should my critical illness and life cover last?

Do I need critical illness and life cover for a mortgage?

No, you’re not legally required to have life insurance or critical illness cover when taking out a mortgage.

However, some lenders may recommend securing a policy. This is because if you were to pass away or become critically ill during the term of your mortgage, it can assist in covering mortgage payments and safeguarding the family home.

If you have dependants who rely on your income or a partner who is covering half the mortgage but couldn’t manage payments alone and has little to no savings that could help in a time of need, then having a policy in place could offer essential protection.

Whilst not a legal requirement, many homeowners choose to obtain life insurance and critical illness cover for that added layer of protection.

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What is mortgage life insurance?

Mortgage life insurance essentially means obtaining life insurance cover to assist with mortgage payments.

This form of cover is put into place to pay out to loved ones if you pass away during the term, making sure they can stay in the family home without the stress of how they’ll afford mortgage payments.

The two types of cover usually linked to the term 'mortgage life insurance' are:

Level term life insurance:

Provides cover for a specified period (up to 40 years)
A lump sum pay out is made if you pass away during the term
Maximum sum assured up to £1,000,000
Pay out sum remains level(the same)
Ideal for helping to protect an interest-based mortgage
Premiums start from just 20p-a-day through Reassured^†

Decreasing term life insurance:

Provides cover for a specified period (up to 40 years)
A lump sum payout is made if you pass away during the term
Maximum sum assured up to £1,000,000
Pay out sum reduces over the policy term (decreases)
Ideal for helping to protect a repayment mortgage
Premiums start from just 20p-a-day through Reassured^¥

How does it work?

Mortgage life insurance works by allowing you to choose a term length and amount of cover, to mirror your mortgage, when you take out a policy. If you were to pass away during the term, the insurer pays out a lump sum to loved ones which can be used to pay off the remaining mortgage balance.

What does it cover?

Mortgage life insurance can help to cover the mortgage in full or provide a lump sum to cover long-term payments (depending on your cover amount).

With average outstanding mortgage debt currently at £132,378^[1] and with 1 in 3 adults having less than £1,000 in savings^[2], it’s important to have such protection in place and to find out how much you’ll need to cover these costs.

You may consider setting aside some extra funds to assist your loved ones with additional costs, such as council tax, transportation, and utilities. Leaving a little extra to support daily living expenses can really benefit the family, as the typical UK household spends around £2,700 each month on living costs ^[3].

For more information, check out Reassured’s comprehensive article on mortgage life insurance.

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What is critical illness cover?

Critical illness cover is a type of policy that pays out a lump sum if you’re diagnosed with a serious illness listed in the policy terms and conditions.

The idea is to help relieve financial pressure during a tough time or replace income if you’re unable to carry on working.

How it works

Critical illness cover can be added to your life insurance policy for an additional cost to provide an extra layer of protection in the event of a severe illness. If you’re diagnosed with a critical illness from the policy’s specified list, you’ll receive a pay out. After a claim is submitted, your policy will come to an end (this includes life insurance).

What does critical illness cover help to pay for?

It’s designed to help you financially in a difficult time to cover costs such as:

Mortgage payments
Household bills
Private medical care
Adjustments to your home (e.g. wheelchair access/ stairlift)
Rehabilitation/ therapy

What illnesses are covered?

Every insurer has its own list of medical conditions that are included in the policy, these can typically include:

Cancer
Heart attack
Stroke
MS (Multiple Sclerosis)
Parkinson's disease
A major organ transplant

It’s crucial to examine the terms of the policy to understand what conditions you’ll be covered for.

This is important because, in some cases, if you have a pre-existing medical condition it might be excluded from the list of critical illnesses covered by the policy.

Please note Reassured do not currently offer standalone critical illness cover.

You could secure life insurance with critical illness cover from 33p-a-day through Reassured^º.

For more information, read Reassured’s guide to critical illness cover including everything you need to know.

What’s the benefit of having critical illness cover and life insurance to protect a mortgage?

Having a life insurance policy with critical illness cover alongside your mortgage offers a more comprehensive safety net for covering your mortgage.

The benefits of having both life and critical illness cover include:

Covers more scenarios (death or serious illness)
Provides extra peace of mind
Can help assure you that your mortgage payments will be taken care of if you become too critically ill to continue working
Ensures your loved ones are protected in every stage of life

Reassured can help you compare fee free life insurance quotes with critical illness cover for an additional cost.

Joint life and critical illness cover for a mortgage

If you’re buying a home with a partner, taking out a joint life insurance with critical illness cover policy instead of two singular policies, could be a cheaper option to help cover mortgage payments.

With a joint policy, only one pay out is made, either; on the first death/ diagnosis (of a critical illness), in the policy term.

However, individual cover can offer more flexibility and would provide two separate pay outs, due to being two separate policies. Ultimately, if a joint cover option is for you, will be down to your own personal preference and needs.

How much does life and critical illness cover cost?

Premiums for life insurance with critical illness cover depend on a variety of factors, including:

Age
Health and wellbeing
Medical history
Smoking status
Length and type of cover
Amount of cover needed

Comparing quotes from different insurance providers can assist you in finding an option that is both suitable and affordable, this can be achieved by using a life insurance broker service.

The table below shows example prices for a life insurance with critical illness policy.

Quotes are based on non-smoker, in good health, for a level term policy with a term length of 20 years and a sum assured of £50,000:

Age	Premium costs
20	£7.70
25	£9.44
30	£11.96
35	£14.68
40	£19.98
45	£26.76
50	£38.02

Life insurance with critical illness cover can start from just 33p-a-day^ºand life cover premiums starting from just 20p-a-day through Reassured^¥.

You can add critical illness cover when you’re taking out a life insurance policy for an additional amount, alternatively you can have a stand-alone policy if more suitable.

You can add critical illness cover when you’re taking out a life insurance policy for an additional amount, alternatively you can have a stand-alone policy if more suitable.

Is life insurance mandatory for a mortgage in the UK?

No, life insurance isn’t mandatory when securing a mortgage in the UK. However, lenders may recommend that you protect your loan in case of accidental death or if you pass away before you fully pay of the mortgage.

What’s the difference between life insurance and mortgage life insurance?

Whilst there isn’t a specific product called ‘mortgage life insurance’, the term simply refers to someone taking out an insurance policy to protect their mortgage.

Typically, this is a decreasing term life insurance policy that will reduce in line with the mortgage balance.

Life insurance pays out a lump sum upon death (if you pass away during the policy term), which can be used for a variety of things, including family living costs, remaining mortgage payments or funeral costs.

Should I get critical illness cover with my life insurance?

It depends on your personal needs and circumstances. Critical illness cover protects you if you’re diagnosed with a serious illness which may prevent you from working (and therefore be unable to keep up with mortgage payments).

If you’d like additional peace of mind that your home is protected from the unexpected, it could be beneficial to consider adding critical illness cover to your life insurance policy.

How long should my critical illness and life cover last?

If you're considering term life insurance with or without critical illness coverage solely to cover your mortgage payments, the duration of the cover should align with your mortgage term (for instance, if it takes 25 years to pay off your mortgage, you may want 25 years of cover).

However, you might also want to consider opting for a longer term to so that you have coverage for family expenses.

Secure mortgage life insurance and critical illness cover

Protecting your family home and loved ones doesn’t need to be complicated.

Whether you choose joint or individual cover or choose to add critical illness cover when you take out a life insurance policy, having the right policy for you can offer peace of mind for your future.

By speaking to one of our friendly experts, we could help you explore all your available options and make sure all your needs are met.

Through Reassured, discover fee free no obligation life quotes today to begin your protection journey.

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