Do I need life insurance for a mortgage?

In the UK:

• £132,378 is the average mortgage debt
• £1,473 is the average monthly mortgage repayment
• £289,723 is the average house price
• 25 years used to be the standard mortgage term, but many new buyers have terms that last longer than 30 years^[1]

Buildings insurance

It’s not a legal requirement, but most lenders will require that you have buildings insurance as a condition of your mortgage.

Buildings insurance will protect you against the cost of repairs or the rebuild of your home if it’s damaged or destroyed (by flood, fire, subsidence or storm).

It covers things such as:

• Damage to the structure of your home (the roof, floors, walls, windows)
• Permanent fixtures (such as bathroom suites and fitted kitchens)

Unfortunately, this isn’t something we provide at Reassured.

Income protection insurance

Income protection provides financial security in the event you’re unable to work due to an illness or injury.

It pays out in monthly tax-free payments to help replace your lost income, allowing you to cover your mortgage repayments and other essential costs.

You don’t have to buy income protection when getting a mortgage, but it’s worth considering if you don’t have sufficient savings or sick pay to fall back on.

Nowadays, income protection insurance is more common than MPPI (explained below) for mortgage borrowers and it can be more affordable.

Quotes start from just 20p-a-day through our fee-free broker service ^‡ .

Critical illness cover

Critical illness cover provides financial protection if you’re unable to work due to a critical (but non-life threatening) illness.

You’re not required to have critical illness cover when buying a house, but many homeowners could benefit from this type of policy.

A claim can be made if you’re diagnosed with a specified illness, such as:

• Cancer (advanced cases)
• Stroke
• Heart attack

It pays out in a lump sum which could help you to cover financial commitments, such as a mortgage, while you’re recovering.

At Reassured, we can help you to arrange critical illness cover combined with a life insurance policy from just 33p-a-day.

Contents insurance

Contents insurance is a type of policy that’s designed to help protect the things in your home (your belongings).

It includes the cost of repairing or replacing damaged possessions in the event of a fire, flood or theft.

Some contents insurance policies also protect your belongings when you’re not in the home (such as your phone or laptop).

This isn’t something we provide at Reassured.

Mortgage payment protection insurance

Mortgage payment protection insurance (MPPI) is a type of income protection that provides cover in the event you’re unable to work due to unforeseen circumstances, such as:

• Illness
• Injury
• Redundancy

MPPI pays out in monthly payments for up to a year or until you return to paid work, helping to ensure you don’t default on your mortgage.

The payments can cover your mortgage repayments in full, or up to a limit of 65% of your usual gross monthly salary.

This isn’t something we provide at Reassured.

Monthly premiums are typically calculated based on the following factors:

• Your age
• Your health & wellbeing
• Medical history
• Occupation
• If you're a smoker

The cost will also depend on:

• Policy type (level or decreasing term)
• How much cover you need (the size of your mortgage)
• The policy term (the length of your mortgage term)

If you’ve chosen a longer term to help protect other aspects of your life, your policy will continue until:

• You pass away (within the term)
• You’re diagnosed with a terminal illness (within the term)
• Your policy term comes to an end