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MORTGAGE LIFE INSURANCE

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  • Quotes from just £4.71[1]Based on £100,000 worth of level term cover for a 30 year-old non-smoker with no pre-existing medical conditions over a 20 year period (December 2024). Moneysupermarket data correct as of 8th January 2025. per month

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What is mortgage life insurance?

Mortgage life insurance, or mortgage protection insurance, refers to a life insurance policy designed to provide financial protection for your mortgage and loved ones in the event of your death.

It’s most commonly associated with decreasing life insurance because the lump sum payout with this policy type is designed to decrease over time along with the value of a debt such as your mortgage.

28% of all life insurance inquiries with MoneySuperMarket are for decreasing term policies however other policy types such as level term cover can also be used to protect your mortgage and can provide for other expenses as well.

If you have an interest-only mortgage, the amount you owe doesn't decrease over time and your loved ones will be responsible for your mortgage payments if you pass away.

How does it work?

Similar to other decreasing term life insurance policies, with a mortgage life insurance policy you pay fixed premiums over a set period of time. The amount of insurance you need decreases as you pay off your mortgage.

If you die or become terminally ill during the policy term, the lump sum payment can help cover the remaining balance on your mortgage, so your loved ones can potentially keep the family home if they wish to.



Do I need life insurance for a mortgage?

While life insurance isn't mandatory when securing a mortgage, it's a worthwhile consideration for those:

  • With dependent loved ones relying on them

  • With a requirement set by the mortgage lender

  • Seeking peace of mind

Read our guide do need life insurance for a mortgage

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What are the main types of life insurance cover?

MoneySuperMarket offers two main types of life cover that can cover your mortgage.

Decreasing term

Decreasing term life insurance policies have a pay-out that decreases over time, ending when the lump sum pay-out reaches zero. People often use these policies to cover their mortgage and decrease them to match the rate at which they pay off the loan.

A Chart depicting decreasing term insurance with a line showing premiums declining with length of policy

Advantages

  • Usually more cost-effective premiums than other policies

  • Aligns with specific debts such as your mortgage

Disadvantages

  • A decreasing payout may leave beneficiaries without cover for other financial needs

  • Cover is aligned with your mortgage repayments so less flexibility for changing financial goals



Level term

Level term policies have a fixed pay-out that stays the same for the whole policy. No matter when during the policy you pass away, your beneficiaries will always receive the full amount.

Chart showing amount of cover as a flat line over time

Advantages

  • You know how much your policy will pay out to your loved ones

  • Can cover your mortgage as well as your beneficiaries

Disadvantages

  • More expensive premiums, which could be a consideration for those with tighter budgets

  • Potential for over-insuring if financial needs decrease over time

What's the best life insurance for me?

Advantages and disadvantages of mortgage life insurance

  • Plus

    Advantages

    • Protects your repayment mortgage

    • Helps pay off one of the most significant debts you have

    • Cover term is typically shorter, meaning you're less likely to over-insure yourself and pay more than you need to

    • Decreasing term cover is often cheaper than level term

    • Offers peace of mind to your loved ones

  • Minus

    Disadvantages

    • If your mortgage is affected by inflation, your life insurance may not cover the full amount

    • You may not have the right cover if your circumstances change, e.g. you have more children or take out a bigger mortgage

    • If the lump sum payment goes directly to the mortgage provider, your loved ones don't have any say in how to spend the money

How much does mortgage life insurance cost?

Life insurance premiums with MoneySuperMarket starts from £4.03i per month but the cost of cover for your mortgage will depend on several factors including:

  • Your age

  • Your occupation

  • Your general health and lifestyle

  • The duration of the policy term

  • The amount of protection needed for your property

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What impacts the price of mortgage life insurance?

The older you are, the more expensive your premiums are likely to be.

If you are a smoker the price of your premiums will probably be higher, due to the associated health risks.

If your job involves substantial hazards or poses a risk to your health, it's likely to increase the price of your policy.

The higher the outstanding mortgage balance, the more your policy will cost

A policy which offers a bigger final payout will generally require bigger payments from you.

Prices are also linked to the expected length of the policy, with a shorter policy usually requiring higher premiums.

Since different insurance providers offer differently-priced policies, comparing quotes is one of the most effective ways to save money and find the best deal for you.

What is the difference between life insurance and mortgage life insurance?

The main difference between life insurance and mortgage life insurance is the type of protection it provides:

  • form icon

    Life insurance

    Life insurance is designed to help protect your family financially if you die during your policy term and pays out a lump sum cash amount to your loved ones to spend on whatever they choose to.

  • Mortgage life insurance

    Mortgage life insurance is specifically put in place to help pay off an outstanding mortgage if you die within your policy term. This type of cover typically reduces over time in the same way your repayment mortgage decreases.

How much cover do I need?

When selecting mortgage life insurance, it's important to consider an amount of coverage that adequately:

  • Safeguards your mortgage ensuring the payout is enough to cover it

  • Provides for your dependents if that is your intention

To help you decide the level of cover you need, try our life insurance calculator

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Add policy options or compare alternative policy types

You can add extra cover to your policy, this can be in addition to covering your mortgage debt

Our expert says…

The amount of life insurance you need will depend on your unique circumstances. A crucial factor to consider is the outstanding debt you may leave behind, particularly your mortgage. With the average UK mortgage debt per household reaching £132,378, it's essential to ensure your loved ones are protected. Beyond mortgage coverage, think about other financial obligations like credit card debt, car loans, childcare costs, education expenses, or general living expenses.

Kara Gammell Personal Finance Expert

Protect your family with life insurance

Receive a Shopping gift card when you buy life insurance 

Buy life insurance through MoneySuperMarket and receive a Shopping gift card worth up to £300. 

T&C’s apply. Not available to those who’ve received a voucher with a life insurance policy purchased after 1st of May 2022. One voucher per person. Offer end date 10th February 2025
 
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Prefer to speak to someone about life insurance?

We’ve partnered with LifeSearch to give people even more guidance when buying life insurance. If you’d like some help deciding what kind of cover you need, talk to LifeSearch free of charge.

Give them a call on 0800 197 3178.

Opening hours are:

  • Monday to Friday 8 am to 8 pm

  • Saturday 9 am to 2 pm

  • Sunday 10 am to 3:30 pm

Lifesearch logo - phone on 0800 197 3178

In most cases if you’re over 18 and a UK resident you should be eligible, but some insurers may also have an upper age limit.

Whenever you make a change to your mortgage or your personal circumstances change, it is important to review your policy to ensure it still suits your needs.

You should be able to cancel your life insurance policy, or as mentioned above remove yourself from a joint policy, but you should check if there is a cancellation fee involved. You won’t get the premiums you have already paid back.

No. If you live past the term of your insurance policy, the money is gone. You can buy what’s known as whole-of-life insurance or life assurance, which has no term and will pay out whenever you die, but it’s more expensive.

You can put your life insurance in trust, which is a way of legally avoiding inheritance tax on your life insurance pay out. 

Whether or not you need life insurance if you don't have a mortgage depends on your individual circumstances. Even if you don't have a mortgage, a life insurance policy may prove worthwhile for you and your dependents.

If you don't have life insurance, the mortgage debt will be passed down to your next of kin. They can decide whether to keep paying the monthly repayments or sell the house to contribute towards paying off the mortgage.

You work hard to earn your money, and we don’t think you should waste a penny of it paying over the odds on your household bills. That’s why at MoneySuperMarket, we’re on a mission to save Britain money.

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You might be wondering if we work with all the companies in the market, or if our commercial relationships with our partners might make us feature one company above another. We’ve got nothing to hide, and we want to give you clear answers when it comes to questions like these, so we’ve pulled together everything you need to know on this page.