Is it compulsory to take out life insurance with a mortgage?

It isn’t compulsory to take out life insurance when getting a mortgage although it is definitely worth considering.

Frequently asked questions

If you are a sole homeowner and you pass away before your mortgage is paid off, the remaining debt will still need to be paid. If your home is being passed on to inheritors, they will be responsible for your monthly mortgage payments once their ability to repay the loan has been assessed. If you have life insurance, the resulting payout may be used to help with the mortgage. However, if you or your loved ones are unable to pay off the mortgage, your lender is legally able to foreclose on the property.

A mortgage insurance policy is a type of term life assurance. It can pay out a cash sum if you die before the end of your policy, and can be used by your loved ones to pay off your mortgage. There are several types of term assurance with different features. Some more suitable for covering a mortgage than others. But you don't need to buy one with 'mortgage' in its name. Other types of cover may be just as suitable.

Mortgage life insurance pays off the remaining balance of a mortgage upon the policy holder's death. If you have one, you may want to check your policy, or if you're considering a new one, find out whether the money goes to your lender or to the family, to help you decide what to do with it.

Credit life insurance is different to other types of life insurance as instead of paying the policy holder's beneficiaries, it pays their outstanding debts directly. The policy holder will usually pay a premium, either up front or incorporated into their monthly payments. This ensures that the full loan can be paid off should the policy holder pass away before they have fully paid off their loan. Credit life insurance is also 'guaranteed' life insurance as no medical examination is needed. So those with pre-existing medical conditions can still protect their loved ones from having to take on their debts, should they pass away.

Decreasing term life insurance, also known as mortgage life insurance, is designed to help your loved ones pay off your outstanding mortgage if you die while covered. Its name comes from the way it works - the total payout of decreasing term life insurance lowers over its duration in line with your mortgage repayments. Cover for decreasing life insurance can be from 1 to 50 years, but this may vary between providers.

If you are a sole homeowner and you pass away before your mortgage is paid off, the remaining debt will still need to be paid. If your home is being passed on to inheritors, they will be responsible for your monthly mortgage payments once their ability to repay the loan has been assessed. If you have life insurance, the resulting payout may be used to help with the mortgage. However, if you or your loved ones are unable to pay off the mortgage, your lender is legally able to foreclose on the property.

A mortgage insurance policy is a type of term life assurance. It can pay out a cash sum if you die before the end of your policy, and can be used by your loved ones to pay off your mortgage. There are several types of term assurance with different features. Some more suitable for covering a mortgage than others. But you don't need to buy one with 'mortgage' in its name. Other types of cover may be just as suitable.

Mortgage life insurance pays off the remaining balance of a mortgage upon the policy holder's death. If you have one, you may want to check your policy, or if you're considering a new one, find out whether the money goes to your lender or to the family, to help you decide what to do with it.

Credit life insurance is different to other types of life insurance as instead of paying the policy holder's beneficiaries, it pays their outstanding debts directly. The policy holder will usually pay a premium, either up front or incorporated into their monthly payments. This ensures that the full loan can be paid off should the policy holder pass away before they have fully paid off their loan. Credit life insurance is also 'guaranteed' life insurance as no medical examination is needed. So those with pre-existing medical conditions can still protect their loved ones from having to take on their debts, should they pass away.

Decreasing term life insurance, also known as mortgage life insurance, is designed to help your loved ones pay off your outstanding mortgage if you die while covered. Its name comes from the way it works - the total payout of decreasing term life insurance lowers over its duration in line with your mortgage repayments. Cover for decreasing life insurance can be from 1 to 50 years, but this may vary between providers.

More on taking out life insurance with a mortgage