Mortgage Protection Insurance

Mortgage Protection Insurance is designed to pay out a lump sum in the event of your death, to ease the financial impact of your passing.

Although it’s not nice to think about, it’s vital to consider how your family would manage your mortgage if you were to pass away. For many families throughout the UK, mortgage repayments are their largest and most important monthly outgoing.

Ask yourself, would your loved ones be able to cover the monthly payments without you? Having Mortgage Protection Insurance in place ensures they won’t have to worry and can continue to live in the home.

What is Mortgage Protection Insurance?

Mortgage Protection Insurance is a form of life insurance. Depending on the type of mortgage you have there are two options for cover – Level Term and Decreasing Term Life Insurance. These types of policies are designed to cover the remaining debt on your interest-only or repayment mortgage should you pass away during the term.

When arranging your protection policy, the term is best determined by your mortgage term so that you’re covered for the length of your mortgage.

Do I need Mortgage Protection Insurance?

If you have a mortgage, then yes, you should seriously consider Mortgage Protection Insurance. Having this type of insurance in place means your loved ones would be able to keep your home if you pass away before you finish paying off your mortgage. If you don’t have a policy in place, you risk leaving your monthly mortgage payments to your partner and/or any dependents. This could create financial worries for your loved ones at an already difficult time.

Types of Mortgage Protection Insurance

We’ve highlighted two products that offer protection for your mortgage:

Decreasing Term Life Insurance

Is best suited to people who have a repayment mortgage. The lump-sum payout decreases over time, mirroring the outstanding balance of your mortgage. The policy term is set for the same duration as your mortgage, meaning you’re covered for the entire length of your mortgage. This means that if you have a 30-year mortgage term your decreasing term life insurance policy would run for at least the same amount of time. For example, at the start of the policy the payout may be £250,000 (the same value as your mortgage), whereas after 10 years of repayments (on your mortgage) the policy payout will reduce in line with the amount left on your mortgage.

Level Term Life Insurance

Is best suited to people who have an interest-only mortgage. This is because the sum assured is a fixed amount throughout the duration of the policy term. No matter when a claim is made, the payout will cover the full amount of your mortgage. This type of cover is also popular with people looking to leave a lump sum for their loved ones to cover more than just the mortgage. It is possible to increase your sum assured to cover other expenses such as utility bills, childcare costs, and general living expenses. This is likely to inflate your premiums but would ensure complete peace of mind that your loved ones will be cared for financially.


Once you’ve decided which type of policy is best for you, there is also the option to add Critical Illness Cover. This is usually combined with Life Insurance so that if you fall critically ill and are unable to work you can still pay your mortgage. The benefit of adding Critical Illness Cover to your policy is that you’re covered for two scenarios, just in case. Do bear in mind though, that your policy will only pay out once. This means if you claim for a critical illness your policy expires once you receive the payout, meaning you no longer have life cover.

Does Mortgage Protection Insurance include Terminal Illness?

Yes, it is common for life insurance policies to include Terminal Illness Cover as standard. If you are unsure, it’s best to check this with your insurance provider when you arrange your cover. Terminal Illness Cover pays out if you are diagnosed by a medical professional as having 12 months or less to live. This gives you access to your lump sum which you may need to help with the cost of medical care, adapting your home, or the help of a carer if necessary.

Why should I get Mortgage Protection Insurance?

In the UK, most people are only able to afford homeownership by taking out a mortgage. Because of this, a mortgage is typically the biggest debt they face in their lifetime. This usually means that people find their mortgage repayments are their largest monthly outgoing. Ask yourself, if you were to pass away, would your loved ones be able to cover this cost?

Mortgage Protection Insurance is vital if you want your dependants (who live with you) to continue living in your home, or if you intend to leave your property to a family member or friend. Without insurance, you risk leaving your loved ones in a difficult financial situation.

What’s the difference between Mortgage Protection Insurance and Mortgage Payment Protection Insurance (MPPI)?

It’s important to note that these two forms of insurance are in fact very different. They are designed to cover you for two different scenarios.

Mortgage Payment Protection Insurance (MPPI) covers the cost of your monthly mortgage payments if you lose your job through redundancy, or you are unable to work due to an accident or sickness. MPPI is available for both repayment mortgages and interest-only mortgages. This type of insurance is designed to bridge the financial gap until you get back on your feet.

Mortgage Protection Insurance is a form of life insurance that covers the outstanding amount on your mortgage if you were to pass away. This is designed to protect your loved ones at an already difficult time and ease the financial stress of your passing.

How much does Mortgage Protection Insurance cost?

The cost of Mortgage Protection Insurance usually depends on:

  • your age;
  • your occupation;
  • your health and medical history;
  • whether you smoke;
  • the amount of cover you arrange (the sum assured);
  • and the length of your policy (the term).

For example, if you are older or have a pre-existing medical condition your premiums will typically cost more. Whereas if you are younger and have no health or medical problems your premiums should cost less.

Your occupation can affect the cost of Mortgage Protection Insurance due to risk. Some occupations carry a higher risk than others, so the premiums you’re offered can depend on what you do for a living. If you’re a pilot or work with explosives, for example, you are likely to pay more for your insurance.

Decreasing Term Life Insurance usually offers lower premiums than Level Term Life Insurance. This is because as the risk to the insurance provider increases (you get older) the sum assured decreases in line with your mortgage.

The best way to find out how much you could expect your cover to cost is by comparing quotes with us. Leave us your contact details so we can give you a quick call to discuss your requirements and give you an idea of how much you could expect to pay. Our service is free and there’s no obligation to purchase, so if you’re curious give it a go!

How to lower the cost of my Mortgage Protection Insurance

When arranging Mortgage Life Insurance it’s important to make sure you have adequate cover. This means a large enough sum assured to cover your mortgage, and a long enough term to cover the length of your mortgage payments. However, we also know it’s important to make sure your monthly insurance premiums are affordable for you. With this in mind, here are a few things for you to consider which could help bring the cost of your insurance down.

Are you covered for death in service?

Some employers include a death in service benefit for their employees. This means they pay a tax-free lump sum to your beneficiaries if you die while you’re employed by the company. It’s worth finding out if your employer offers this benefit, and if you’re eligible, because this could mean you can lower your own sum assured if you know your loved ones will receive funds from your employer. Remember though, that if you change jobs you may lose this benefit, and many of these policies will only payout due to accidental death.

Improve your health

When it comes to insurance, everything is about risk. This means that the ‘unhealthier’ you are, the more likely it is your premiums will be higher. For example, someone who smokes or is seriously overweight poses a greater risk to their insurance provider. This risk is factored into the amount the insurer will charge for cover. If you already have Mortgage Protection Insurance but your circumstances have changed since you arranged cover, it may be a good idea to re-look at quotes based on your new health.

Change your lifestyle

Your occupation and any hobbies you have are factored into your premiums. This is because some jobs and activities pose more of a risk to the insurer. For example, an airline pilot or sky-dive instructor is likely to be quoted higher premiums than an office worker. And someone who regularly goes skiing or abseiling will find these activities put their premiums up too. Even though risky jobs and hobbies can inflate your premiums you should always disclose them honestly with your insurer. If you don’t, your insurance may be void. It’s worth being aware that these factors affect your premiums because if your lifestyle changes after you get cover in place it could be beneficial to double-check you’re getting the best deal.

Regularly compare quotes

Most people get quotes for their car insurance every year. Why wouldn’t you do the same for insurance to protect your mortgage? You may find that a new policy could save you a few pounds every month, which quickly adds up when you calculate the total savings over the life of the policy. And even if you end up staying with your current insurer, a quick comparison is worth it for peace of mind.

How much Mortgage Protection Insurance do I need?

The answer to this will be different for everyone. Generally, the amount of Mortgage Protection Insurance you need to arrange depends on the length and size of your mortgage. It’s important to make sure your policy covers your mortgage otherwise your loved ones may receive a lump sum that isn’t enough.

Ideally, your policy should also be arranged for the same length of time as your mortgage, so that you’re covered for the entire term. And equally, so that you don’t pay for a policy that lasts longer than your mortgage.

Do I need life insurance for a mortgage?

Having Life Insurance for your mortgage is not compulsory; it’s not a legal requirement. However, it is highly recommended.

Although it is not a legal requirement for a mortgage, some providers will ask that you arrange Life Insurance before they lend you money to buy your home. This is often a precondition so that the provider can ensure their risk is protected.

Can I get Mortgage Protection Insurance from my mortgage provider?

Yes, you can. Your mortgage provider is likely to encourage you to take out a policy with them when you arrange your mortgage. If you’re looking for convenience this is great, but how do you know you’re being offered a competitive price? Mortgage providers will often use just one life insurance company when offering a quote, rather than comparing the whole market.

Your mortgage provider may require you to have an insurance policy in place, but this doesn’t mean you have to arrange it with them. You may find it beneficial to compare quotes before committing to a policy, so you know you’re getting the best deal. The cost of life insurance often varies between insurers so it’s wise to compare quotes.

What if I already have Mortgage Protection Insurance through my mortgage provider?

It’s common for mortgage providers to encourage their customers to arrange a protection policy through them at the same time as their mortgage. The problem with this is that you don’t necessarily think to compare prices, which can be a costly mistake. Even if you already have a policy in place, you can still compare prices for a cheaper quote and cancel your old policy.

Can I put a Mortgage Protection Insurance policy in trust?

Yes, you can. It doesn’t matter if you choose decreasing or level term life insurance, you can write your policy in trust. Writing your policy in trust protects the pay-out from inheritance tax, making sure your beneficiaries receive the full amount. If you do not write your policy in trust it becomes classed as part of your estate when you pass. This would mean that if your estate is valued at over £325,000, your dependants would need to pay inheritance tax before they receive any money.

Writing your policy in trust may sound difficult but it’s actually fairly simple when you know how. This is why we’ve partnered with Libertas Wills, experts in wills and trusts, to offer this service to our customers.

Joint Mortgage Protection Insurance

A joint Mortgage Protection Insurance policy can be cheaper than two separate policies. However, the policy will only pay out once. This means that if one of you passes away and a claim is made, the policy ends, leaving the other person uninsured.

It’s also worth considering what would happen if you were to end the relationship with your joint policyholder. The existing policy cannot be split, so you would need to cancel the policy and take out two separate policies. Although this is a straight-forward process, the older you are when you arrange a policy the more your premiums are likely to cost. To avoid finding yourself in this situation, it’s wise to have two separate policies from the beginning.

What happens if I remortgage?

When you arrange a Mortgage Protection Insurance policy, the amount you’re covered for and the length of cover are typically aligned with your mortgage. It’s common for people to find themselves needing to remortgage though. For example, when they move to a new house, when they want to borrow more to develop their current home, or their mortgage has expired.

If you decide to remortgage, the best way to make sure you’re still covered is to review your existing policy. You may find that you’re covered for too little, or too much, and that your policy term no longer matches the length of your mortgage. If this is the case, you should get a quote from your existing Mortgage Protection Insurance provider and compare it with other providers. You may find that a different provider can offer similar protection at a cheaper premium.

As with any type of insurance, it is wise to compare Mortgage Protection Insurance quotes before making a final decision. We can help you compare quotes from across the UK Life Insurance Market in one go. Leave us your contact details so we can give you a call to discuss your requirements and find you the most suitable options. Remember, we don’t charge a fee for our service, and you’re under no obligation to purchase.

What if I don’t have Mortgage Protection Insurance?

If you don’t have adequate cover for your mortgage, you risk leaving your loved ones in a difficult financial situation if you pass away. If they are unable to cover the mortgage payments, they may have to leave the family home, at an already difficult time.

Adequate cover includes two things:

  • Your term; your Mortgage Protection Insurance should match the length of time left on your mortgage. Otherwise, you risk your insurance not covering you till the mortgage is finished.
  • Your sum assured; you should make sure your Mortgage Protection Insurance covers you for (at least) the outstanding amount left on your mortgage.

Who doesn’t need Mortgage Protection Insurance?

You may not need Mortgage Protection Insurance if there is no one you want to leave your property to when you pass away. For example, if you don’t have a partner, children, family member, or friend to pass your property to, you won’t necessarily need to clear your mortgage. In this scenario, your property would be left to the government by default.

Do I need Mortgage Protection Insurance if I already have Life Insurance?

The answer here depends on the details of your existing Life Insurance policy. It’s best to work out if your sum assured and policy term would cover your mortgage if you were to pass away. For example, if your existing Life Insurance policy covers you for £100,000 for 15 years this may not be enough to clear your outstanding mortgage.

It’s also worth considering why you arranged life cover before buying a property. Perhaps your intention was to protect your children, cover household bills, or simply to ensure your loved ones could continue to live a particular lifestyle. If this is the case, you may need to increase your sum assured to cover these plus your mortgage.

If your existing policy is not sufficient enough to cover your mortgage, you don’t need to panic. You have two options here. The first option is to increase your level of cover with your existing insurance provider, which will inevitably increase your premiums. Or you could compare quotes from across the market to find the most competitive policy based on your updated circumstance.

If you decide to compare quotes, you can cancel your old policy to avoid paying two premiums. But because Life Insurance is not a form of savings, you will get nothing back from your insurer. You may decide to keep both policies active, which is great, but make sure your premiums are affordable long term. Otherwise, if you find you need to cancel your first policy at a later date you still won’t get any money back. When deciding if your premiums are affordable you need to consider not only what you can afford today, but what you will still be able to afford nearer the end of the policy term.

Compare Mortgage Protection Insurance quotes

As with any type of insurance, it’s always best to compare quotes before taking out a policy. Insurance providers tend to offer different benefits and perks with their policies though, which can make it difficult to get a clear comparison. This is where we can help.

Our team of insurance experts is ready to help clarify your options and guide you through the process of setting up a policy. We’re a whole of market broker, meaning you get an accurate comparison of UK insurers from an unbiased perspective.

We know that no two customers are the same, which is why we don’t quote misleading ‘off-the-shelf’ prices online. In our experience, it’s best to speak to you directly to assess your circumstances before providing any quotes. This means no hidden surprises for you later down the line.

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