Do you need life insurance for a mortgage

Level term life insurance or Family protection insurance

With level term, your premium and cover amount remain the same throughout the policy term.  You can also protect your cover from the effects of inflation with this cover.  You can choose to take inflation into account and increase the lump sum payment in line with rising prices, although this will mean that your monthly payments will rise.

Decreasing term life insurance or mortgage protection insurance

This type of policy is built with mortgages in mind, although you can use it for other purposes too.  Your cover amount decreases each month like the outstanding balance of a mortgage.  It may also cost less than other types of term life insurance because the payout reduces as your mortgage does.  

To understand the difference between level and decreasing term insurance, we've put together a useful guide.

Life insurance can offer landlords some much needed protection. Having a life insurance policy can ensure that if you were to pass away while acting as a landlord, your family or business partners could possibly be able to continue covering the mortgage payments and other associated costs, like repairs or bills. So, even if you already owned the home outright and were just renting it out for extra income, a life insurance payout could help cover any maintenance, bills, or taxes.

Determining how much coverage you need from your life insurance can depend on a few things.

• Mortgage balance: You’ll need to think about how much of your remaining balance there is and how much you’d want a potential payout to cover.
• Interest rates: If you’ve got an adjustable-rate mortgage, you should be prepared for potential increases in your payments.

Even if you don't have a mortgage, having life insurance can still be useful when it comes to future financial protection.  Your life insurance could cover other expenses, like:

• Income replacement or support
• Debts and financial obligations, like car loans or credit card balances
• Funeral costs
• Education funds for younger family members

While you don’t need a life insurance policy to get a mortgage, it’s a very useful way to protect your home and provide your family with financial security after your passing. Whether you’re a homeowner, a landlord, or even renting or owning your home outright, life insurance has a lot of benefits worth considering.

You can use our life insurance calculator to figure out how much life insurance you might need. It’s based on how much you’d like to leave your family, or the balance of your mortgage or other debts. And it only takes a few minutes.