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Mortgage Life Insurance

What is mortgage life insurance?

Mortgage life insurance, as the name suggests, is a policy designed to pay off your mortgage debt with a cash lump sum pay out, if you die during the term.

Sometimes mortgage life insurance is also referred to as ‘decreasing term life insurance’, ‘mortgage protection’ or ‘mortgage protection life insurance’.

Cover usually aligns with your mortgage term, protecting the family home and your dependants, should anything happen to you.

Therefore, if you have a 25-year mortgage term, your life insurance policy would run for at least this length of time.

There are two types of life insurance commonly used to cover a mortgage. The most common, decreasing term, as well as level term.

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Why might you need mortgage protection cover?

A mortgage is likely to be the largest debt that the vast majority of us will incur during our lifetime.

Very few people are lucky enough to have the funds to buy a house outright. Therefore, a mortgage is necessary if we are to own a home.

Often, a property purchase is much more achievable if we take out a joint mortgage, with our spouse, partner or a friend.

But what would this mean for the surviving partner and possibly children, if one of you was no longer around?

Mortgage life insurance scenarioMortgage protection life insurance scenario

The Money Charity in the UK reports:

These statistics emphasise just how important protecting your home with life insurance cover is.

See data from their February 2018 report, to see how you compare »

Having adequate mortgage life insurance protection in place is vital for homeowners who do not want to burden their partner with unaffordable mortgage repayments in the event of their death.

Mortgage life insurance can also provide you with complete peace of mind, knowing that your family will not be forced into an unwanted change of lifestyle.

Types of mortgage cover

There are 2 main types of life insurance available to cover your mortgage:

  1. Decreasing term. Very common – normally taken out to cover a repayment mortgage
  2. Level term. Normally taken out to cover an interest-only mortgage (where the balance does not decrease).

As with any life insurance cover, the policy you choose will be dependent on your budget, age, health, whether you have children and the level of protection you require.

Things to consider with mortgage life insurance:

Why use Reassured to secure the best mortgage protection?

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