Losing the home as well
It’s enough coping with the loss of a loved one. But without a breadwinner to cover a mortgage, your family could lose their home as well. For anyone who has struggled to get a deposit together for the biggest purchase of their life, this is a nightmare scenario. And it can happen all too easily.
Without a life insurance payout, your family may not be able to meet the mortgage repayments, and the loan could default. The lender needs to recover the money they gave you for the house. So they may repossess it, evicting your family from their home.
Taking on a bigger mortgage
As families grow, many look to move to a larger home. While you’ve upgraded to a bigger home, have you updated your life insurance for a bigger mortgage? It’s worth mentioning as many buying a home for the second or third time neglect this step – one that certainly gets attention for first-time homebuyers.
Types of Life Insurance cover to suit you
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.
Can help cover a repayment mortgage or be used for a debt that gradually reduces over time.
Family Income Benefit
Can provide your family with a monthly income of up to £2,500 a month for the remainder of the policy, giving your child some home life stability.
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
Seven good reasons to choose Life Insurance from Royal London
- Be covered in minutes – with our easy online application
- Make a real difference for your child – up to a £500,000 single payment or up to £2,500 a month for the remainder of your policy
- Affordable, from just £7 a month – that’s only 23p a day!
- Extra peace of mind for you and your family – we include Terminal Illness Cover, at no extra cost
- Serious Illness Benefit – for protection against six common illnesses that we define
- Three types of cover to suit your lifestyle and budget – Level Cover, Decreasing Cover and Family Income Benefit
- We're the UK's biggest mutual insurer - so you're in good hands, based on assets. Market InSights: UK 2016. Sept. 2017
Answers to your questions
What is mortgage life insurance?
Mortgage life insurance is simply another name for life insurance where it is being used to help cover a mortgage. It pays out a lump sum of money on death that can be used to pay off your mortgage. The payout amount for mortgage life insurance reduces over the term of the policy, much the same as the outstanding amount for a repayment mortgage does. This is essentially the same as decreasing cover life insurance, but different to level cover life insurance, where the payout amount stays the same.
Does Royal London offer mortgage protection?
No, but our Decreasing Cover works in the same way as mortgage life insurance does.
How does decreasing life insurance work?
The payout amount of decreasing cover life insurance reduces in line with a 7% fixed interest rate repayment mortgage – that’s how our Decreasing Cover works.
You choose a payout amount and a policy term that matches that of your mortgage or loan. This way your insurance matches your loan commitment. So each month your cover decreases, roughly in line with the debt you're repaying.
As both come to an end at the same time, your Decreasing Cover will reach zero by the end of the term. You're covered only for as long as the policy runs – once the term ends, the cover ends.
If a claim is made during the policy term, any outstanding repayments on your mortgage or loan should be covered as long as your interest rate is not greater than 7% and you’ve not extended the term of your mortgage.
Will decreasing life insurance pay off my mortgage if I die?
Decreasing Cover is designed to leave your family enough money to pay off your mortgage. Our life insurance products and mortgages are not linked in any way. While it’s not guaranteed, Decreasing Cover can pay off your mortgage, if:
- the policy term stays the same as the mortgage term,
- the mortgage amount doesn’t increase, and
- the mortgage interest rate stays below 7%.
Do I have to take out life insurance to cover a mortgage?
It’s not compulsory, but mortgage lenders may want to see that their loan can be repaid if you die. Life insurance can cover a mortgage, giving lenders reassurance that the loan can be paid off. You may not need life insurance if you have assets that can be sold to cover the cost of the mortgage. Also, if you don’t have dependants, you may not need life insurance, as your house could be sold.
How much cover can I have?
The maximum cover amount you can have is £500,000 as a lump sum pay out or a monthly income of up to £2,500 a month, for the remainder of the policy. This is across all life insurance policies you may have with us.
Will I need to provide medical information?
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.
How long do I need to make payments for?
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 (or monthly cash payments if you chose Family Income Benefit).
You can stop making your payments at any time. If you do, your cover will end and you won't get anything back.
Can I reduce my monthly payments?
Yes, 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.
Can I take out additional cover?
You cannot increase cover under your existing policy; however, you can apply for a new policy. Acceptance is subject to completion of our application process and the maximum cover limits which apply at the time. Also, your partner can apply for a policy too – as long as they’re aged between 18 and 70, a UK resident and not a member of the Armed Forces, including Reservists.
What if I stop paying?
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.
Got a question?
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