Protecting Your Loved Ones With Life Insurance

Protecting your loved ones with mortgage protection life insurance

Published: 22 November 2016 | Updated: 14 January 2021

You've saved for a deposit, bought your home and made it your own. A place where you and your family feel safe and secure. But life is full of unexpected surprises so it's best to be prepared and ensure that if something does happen to you, your family will be able to afford the mortgage repayments or pay the mortgage off without you. With a mortgage protection life insurance policy, as long as you keep up with the monthly premium payments, your family will receive a lump sum payment in the event of your death. 

Research suggests one in four UK breadwinners don't have any form of life insurance to help support their family. Perhaps this is because there are several types of life insurance on the market so choosing the right policy can seem daunting. If you're looking for a life insurance policy, it's important to do some research and understand all the options.

There are three main types of life insurance available. With level term life insurance, you choose the policy term and cover level, and the provider pays out the agreed amount if you die within this term. Alternatively, mortgage protection life insurance, also known as decreasing term cover, offers a level of cover that reduces over time, usually in line with a standard repayment mortgage. If you die within the term of the policy, the pay-out is designed to cover the outstanding balance of your mortgage, allowing your family to stay in their home without having to worry about how they'll cover the cost of the mortgage repayments. Finally, critical illness cover pays out if you are diagnosed with one of the insurer's specified critical illnesses within the policy term, helping your family to cope financially at a very difficult time.

For most families, the biggest fixed monthly expense is their mortgage payment For this reason, mortgage protection life insurance may be worth considering if you have a repayment mortgage. We've answered some of the most asked questions about mortgage protection life insurance and the benefits it could provide your family.

What is mortgage protection life insurance?

Mortgage protection life insurance is designed to pay off the repayment mortgage on your home in the event of your death, meaning your loved ones won't have to cope with losing you and their home in quick succession. 

How does mortgage protection life insurance work?

Mortgage protection life insurance decreases over the term of your plan, broadly in line with the outstanding balance of your repayment mortgage so if you were to pass away your family wouldn't have to worry about this large expense. And because mortgage protection life insurance policies decrease over time, it's often cheaper than level term life insurance which stays at the same level throughout the term of the policy. Should you have an interest only mortgage you may wish to consider level term life insurance.

Find out more about the types of life insurance available.

Can you alter a mortgage protection life insurance policy?

If your circumstances change, not all polices can be amended to provide less or more cover. However, if you have recently moved into a larger house after having children for example, many insurers will allow you to increase your level of protection (which may be subject to health evidence) to ensure your mortgage protection insurance covers the full amount of any mortgage on your new property. 

Do you have to buy a mortgage protection plan from your bank or mortgage lender?

Many people buy mortgage protection life insurance at the same time as purchasing a new home, choosing to buy cover from their bank or mortgage provider. However, checking with other insurance providers can often get you a better deal, so have a look around and see what's available.

Find out more about shopping around for life insurance deals.

Is critical illness cover included with mortgage protection life insurance?

Most providers can offer critical illness cover as an extra level of cover when buying mortgage protection life insurance. Critical illness cover is designed to pay out a lump sum if you were to develop a serious condition such as cancer or a heart problem.

If you are unable to work and pay your bills - such as mortgage repayments - adding critical illness cover to your policy could prove invaluable. If you do take out critical illness cover and mortgage protection life insurance together, the policy may only pay out once, so it's best to check with your chosen insurance provider.  

How is the cost of mortgage protection life insurance calculated?

The amount you pay for mortgage protection life insurance is calculated using a range of factors, including how long you need the cover for (i.e. the length of your mortgage), your age and also your life expectancy.

To compare all your life insurance quotes quickly and easily, use our price comparison service. It's free, fast and allows you to instantly view and compare all your quotes in one straightforward search. If you're ready, compare life insurance quotes now.


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