When you take on a mortgage, you take on a commitment that could outlast you. Life insurance for mortgage protection is there so that, if the worst happened, your family wouldn’t lose the home on top of losing you. Here’s how it works and what’s worth considering.
The main types
Decreasing term assurance. This is the classic mortgage protection policy. The cover reduces over time, roughly in line with your shrinking repayment mortgage balance, so there’s always enough to clear it. Because the cover decreases, premiums are usually lower — it’s a cost-effective way to protect a repayment mortgage.
Level term assurance. The cover stays the same throughout. This suits interest-only mortgages (where the balance doesn’t reduce) and people who want to leave something extra for their family beyond just clearing the mortgage.
Cover worth thinking about alongside it
Life cover pays out on death — but plenty of things can derail a household’s finances without it coming to that:
- Critical illness cover pays a lump sum if you’re diagnosed with a serious illness the policy covers, which could clear or reduce the mortgage while you recover.
- Income protection replaces part of your income if you can’t work due to illness or injury, helping you keep up payments and bills.
A tip that costs nothing
Life policies can usually be written “in trust”, which generally means the payout reaches your family faster and outside your estate. It’s a simple step that’s easy to overlook.
The right combination depends on your mortgage, your family and your budget. We’ll help you protect what matters without paying for cover you don’t need. Get in touch for a no-obligation review.
