What is mortgage life insurance?

Mortgage life insurance is typically bought to cover a mortgage, so in the event of your death your loved ones can pay off your outstanding mortgage.  It’s also called decreasing term life insurance. The amount you are covered for decreases over the term of your policy, similar to the way a repayment mortgage decreases.

Frequently asked questions

It depends on your financial situation and what you want to protect financially. For example, you may decide to take out mortgage life insurance because your lender would prefer you had one in place. If you die during the term of your mortgage, your repayments would be covered by your life insurance.  You may also wish to take out mortgage life insurance to protect your home for your loved ones, if you die during the term of your policy.

Do ensure that you take out enough to cover your mortgage. For example, if you’ve got a 20-year mortgage for £400,000 and you take out mortgage life cover for £300,000, you’ll be at risk of underinsuring your mortgage. Which means your loved ones will be left with a shortfall to cover the outstanding mortgage debt.

There’s no difference. Mortgage life insurance and mortgage protection mean the same thing.

You don’t have to buy mortgage life insurance from your mortgage provider, so take the time to compare life insurance quotes and find a policy that best suits you.

Writing a policy in trust means the payout from the policy will be paid directly to the beneficiaries rather than your legal estate. It means that the payout won’t be subject to inheritance tax. It also means payment to your beneficiaries will probably be quicker, as the money will not go through the probate process. Instead, the insurer can start to arrange the payout once they’ve received the death certificate and any other required documents.

Mortgage life insurance is typically bought to cover a mortgage, so in the event of your death your loved ones can pay off your outstanding mortgage. Income protection pays a percentage of the policyholder's income each month if they are unable to work. The percentage of income and the length it pays out for are agreed at the outset.

It depends on your financial situation and what you want to protect financially. For example, you may decide to take out mortgage life insurance because your lender would prefer you had one in place. If you die during the term of your mortgage, your repayments would be covered by your life insurance.  You may also wish to take out mortgage life insurance to protect your home for your loved ones, if you die during the term of your policy.

Do ensure that you take out enough to cover your mortgage. For example, if you’ve got a 20-year mortgage for £400,000 and you take out mortgage life cover for £300,000, you’ll be at risk of underinsuring your mortgage. Which means your loved ones will be left with a shortfall to cover the outstanding mortgage debt.

There’s no difference. Mortgage life insurance and mortgage protection mean the same thing.

You don’t have to buy mortgage life insurance from your mortgage provider, so take the time to compare life insurance quotes and find a policy that best suits you.

Writing a policy in trust means the payout from the policy will be paid directly to the beneficiaries rather than your legal estate. It means that the payout won’t be subject to inheritance tax. It also means payment to your beneficiaries will probably be quicker, as the money will not go through the probate process. Instead, the insurer can start to arrange the payout once they’ve received the death certificate and any other required documents.

Mortgage life insurance is typically bought to cover a mortgage, so in the event of your death your loved ones can pay off your outstanding mortgage. Income protection pays a percentage of the policyholder's income each month if they are unable to work. The percentage of income and the length it pays out for are agreed at the outset.

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