Mortgage Protection Life Insurance

Protect your home no matter what happens

What is mortgage protection life insurance?

Your mortgage is probably your biggest financial commitment, so if something happened to you, how would your family keep paying it? That’s where mortgage protection life insurance steps in. It helps pay off your mortgage if you pass away during the term.

It’s not legally required, but it’s a smart move if you’ve got loved ones depending on your home.

This type of life insurance typically comes in two main forms: level term and decreasing term. Choosing the right one depends on your mortgage type and what you want the policy to achieve.

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Warm, welcoming image of a family at home, reflecting mortgage protection and security

Do I need it?

While mortgage lenders don’t require life insurance, if you have a partner, children, or anyone who relies on your home, mortgage protection should be high on your financial to-do list.

Without it, your family could be left to deal with a mortgage they may not be able to afford. With it, they’re protected, can pay off the mortgage and stay in their home, even in your absence.

What are my options?

You’ve got two main choices here: level term and decreasing term.

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Level Term

Say you’ve got a £220,000 mortgage and get £220,000 in level term cover over 25 years. That cover stays the same the whole time.

Die on day 50? Payout is £220,000.
Die on day 8,000? Still £220,000.

So while your mortgage balance slowly reduces over time, your life insurance doesn't. This means that as the years go on, your loved ones could end up with money left over after clearing the mortgage — useful for funeral costs, outstanding debts, or future financial needs.

Advantages

✔Fixed premiums for peace of mind
✔Pay-out stays the same, no matter when you die in the term
✔Extra financial support for your family (especially if you die later in the term)

Disadvantages

✖Usually costs more than decreasing term
✖Doesn’t adjust for inflation — £220,000 now isn’t worth the same as it will be in 20 years

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Decreasing Term

Now imagine you also have a £220,000 mortgage, and you take out a decreasing term life insurance policy for 25 years to match it. With this one, your cover reduces over time, in line with your mortgage balance. So if you die 10 years into the policy and still owe £120,000, that’s what your family would receive. If you die near the end and only £10,000 remains on the mortgage, that’s what they get.

This type of insurance is typically used alongside repayment mortgages where your balance steadily decreases and is usually cheaper than level term.

Advantages

✔Often the most affordable option
✔Specifically designed to match your mortgage balance
✔Premiums stay the same throughout the policy term

Disadvantages

✖Pay-out reduces over time
✖No surplus funds for your family beyond what’s owed on the mortgage

Align your policy to your mortgage type

If you have a repayment mortgage, decreasing term insurance is usually the best fit. If you have an interest-only mortgage, level term insurance is the safer option.

Also consider adding critical illness cover

This way, if you’re diagnosed with a serious illness and can’t work, your mortgage could still be paid off — not just in the event of death.