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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 with a cash lump sum pay out, if you were to 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 your family home and dependants, should anything happen to you.

Therefore, if you have a 25-year mortgage term, your mortgage 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 more common, decreasing term, as well as level term.

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Who might need mortgage life insurance cover?

A mortgage is likely to be the largest debt 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?

The Money Charity in the UK reports:

These UK statistics emphasise just how important protecting your mortgage with life insurance cover really 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 protection 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.

Mortgage life insurance scenarioMortgage protection life insurance example scenario

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Mortgage life insurance in summary:

Why use Reassured to secure the best mortgage protection policy?

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