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Keep your family home with mortgage life insurance
If you died and didn’t have life insurance in place, then those who live with you may not be able to meet the mortgage repayments. Your mortgage lender would still need to recover the money they gave you for the property. So they may repossess it, evicting your family from their home in what would already be an already a stressful time.
Taking out mortgage life insurance, like our Decreasing Cover (also known as decreasing term life insurance), means that your family home is protected should you pass away.
How does Decreasing Cover work?
Decreasing Cover can be used to cover a debt that decreases over time, such as a mortgage. For example:
- You take out a £300,000 repayment mortgage over 25 years
- As the main income earner, if you pass away, your family get a lump sum which could be used to clear the mortgage
- So, you take out a 25-year Decreasing Cover life insurance policy with a £300,000 payout
- You pay the monthly payments for your insurance
- As you make monthly repayments on your mortgage, your mortgage debt reduces. Your decreasing cover insurance payout also reduces, so it's in line with your mortgage
- Your decreasing cover insurance payout will reduce in line with your mortgage payments as long as:
-the interest rate on your mortgage never increases above 7%;
-you've not extended the length of your mortgage - If you pass away at any time within those 25 years, your loved ones will receive a payout from the decreasing cover insurance, which should be enough for them to pay off the mortgage.
Once your decreasing cover insurance reaches the end of its 25-year term, your payout will be £0. This is line with your mortgage repayments which should be £0, as you've taken out a 25-year repayment term mortgage.
If a claim is made during the policy term, any outstanding repayments on your mortgage or loan should be covered.
Important things to know
- Our Life Insurance has no cash-in value – it’s a protection policy only
- If you stop making payments, your cover ends and you won’t get anything back
- If you’re a UK resident aged between 18 and 70, excluding members of the Armed Forces and reservists, you can apply.
Types of mortgage life insurance cover to suit you
Level Cover
Can pay out a fixed amount to protect an interest-only mortgage or provide a lump sum to help your family out with outstanding debt.
Decreasing Cover
Can help cover a repayment mortgage or be used for a debt that gradually reduces over time.
Six good reasons to choose us
- Be covered in minutes – with our easy online application
- Affordable, from just £7 a month – that’s only 23p a day!
- Get up to £500,000 in a single payment
- Extra peace of mind for you and your family – we include Terminal Illness Cover, at no extra cost
- Two types of mortgage life cover to suit your lifestyle and budget – Level Cover and Decreasing Cover
- We're the UK's biggest mutual insurer - so you're in good hands, based on assets. ICMIF Global 500 2019.
Decreasing Cover FAQs
Mortgage life insurance is designed to pay off the rest of a mortgage when the policy holder dies.
Decreasing Cover is a type of mortgage life insurance. It can be used to cover a debt that decreases over time, such as a mortgage.
The maximum cover amount of life cover you can have with us is £500,000. This is the maximum as a lump sum pay out. This amount applies across all life insurance policies you may have with us. So, if you have a life insurance policy with a £200,000 payout amount, you could take out another life insurance policy with a maximum payout of £300,000.
Yes, when you apply, you’ll need to answer a few simple health questions. You need to answer these questions accurately and honestly. Depending on your answers you could be covered in a few minutes.
You’ll need to keep making monthly payments throughout the period of cover, unless you die or a terminal illness diagnosis has been confirmed. If that happens, we’ll pay out the single amount.
You can stop making your payments at any time. If you do, your cover will end and you won't get anything back.
You can reduce the payment at any time to any amount, subject to the minimum of £7 a month for Life Insurance. If you choose to reduce your payment your cover amount will also reduce. If you have Serious Illness Benefit you may not be able to reduce your monthly payments to £7. This is because the cost of Serious Illness Benefit is worked out separately, even though we take both payments at once.
If you stop making your monthly payments, then your cover will stop. It is worth remembering that you won’t get any money back, as this is a life insurance policy and not a savings plan. So, you can’t cash in your cover at any time.
Mortgage life insurance is designed to pay off the rest of a mortgage when the policy holder dies.
Decreasing Cover is a type of mortgage life insurance. It can be used to cover a debt that decreases over time, such as a mortgage.
The maximum cover amount of life cover you can have with us is £500,000. This is the maximum as a lump sum pay out. This amount applies across all life insurance policies you may have with us. So, if you have a life insurance policy with a £200,000 payout amount, you could take out another life insurance policy with a maximum payout of £300,000.
Yes, when you apply, you’ll need to answer a few simple health questions. You need to answer these questions accurately and honestly. Depending on your answers you could be covered in a few minutes.
You’ll need to keep making monthly payments throughout the period of cover, unless you die or a terminal illness diagnosis has been confirmed. If that happens, we’ll pay out the single amount.
You can stop making your payments at any time. If you do, your cover will end and you won't get anything back.
You can reduce the payment at any time to any amount, subject to the minimum of £7 a month for Life Insurance. If you choose to reduce your payment your cover amount will also reduce. If you have Serious Illness Benefit you may not be able to reduce your monthly payments to £7. This is because the cost of Serious Illness Benefit is worked out separately, even though we take both payments at once.
If you stop making your monthly payments, then your cover will stop. It is worth remembering that you won’t get any money back, as this is a life insurance policy and not a savings plan. So, you can’t cash in your cover at any time.
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