What is mortgage protection life insurance?

The amount you have left to pay on your mortgage usually drops over time. And if you have a smaller mortgage, you need less life cover – so mortgage protection life insurance decreases over time too.

With this type of cover, you pay the same amount in premiums each month for as long as your policy lasts. Your cover amount, which is how much your loved ones could get if they make a successful claim, gradually decreases until it reaches £0. The idea is that your life cover and mortgage repayments reach £0 together at the same time.

Because of the way it works, with decreasing life insurance your premiums are usually lower compared to other types of life cover. However, there are a few things to remember. Your cover will end if you don’t pay your premiums, the cover amount is only paid out once and there’s no cash in value at any time.

Whether choosing between level or decreasing cover for your mortgage insurance, you’re protected if you pass away during the term of your policy.

And it’s important to know what’s covered and how, some of things we cover are:

• Protection if you die – leave behind a lump sum if you pass away while you have the policy.
• Lump sum payment – you can choose up to £5 million worth of cover and get the full amount after a successful claim.
• Protection when buying a house – if you take out cover at the same time as buying a house, you’ll have up to 90 days of free life insurance during the house purchase process. 
• Terminal illness cover – you can get your lump sum early if you’re diagnosed with a terminal illness which meets our definition and you’re not expected to live longer than a year.
• Length of cover – you can choose the length of cover you need, from short-term to 50 years or until you’re 90 years old.
• Separation benefit – if you separate from your partner, some joint policies can be split into two single policies.

To find more details about mortgage life insurance, check out our dedicated webpage about term life insurance.

You don’t legally need life insurance if you get a mortgage, though some mortgage providers might insist you take it out. If you do want to take out life insurance to help cover your mortgage, you can either get it from your mortgage adviser, a financial adviser if you have one, or direct from an insurer like us.

What type of life insurance is right for you depends on your circumstances. You can find out more about the different types of life insurance here.

Getting a mortgage can be a big step in life and it could be an ideal time to stop and consider what protection you have wrapped around you and who you love. 

Mortgage protection life insurance can help give reassurance for the future. So you can get on with enjoying life today, knowing it will protect the important people in your life later on. That if you die before paying off your mortgage, and it’s during the policy term of your life insurance, they could use the money from a successful claim to help pay off the rest of the mortgage, other long-term loan, or spend on whatever they want.

The type of pay-out your family gets after a successful claim will largely depend on the type of cover you have. Taking out level cover means that your family will get a one-off lump sum to use however they like. This amount could not only help them keep the living standards they’re used to, but also help pay off an interest-only mortgage. It could also go towards general living costs or monthly payments like rent.

Having decreasing cover means the lump sum you choose, decreases over time, and could help your family to pay off a repayment mortgage or a long term loan.

When you're buying a new home

You can get up to 90 days of free home purchase cover if you take out life insurance with us at the time you’re taking the plunge and snapping up a new home. Once we’ve accepted your life insurance application, your free cover starts after you’ve exchanged contracts, or missives are completed if you live in Scotland and lasts up until you complete — so long as you’ve given us a future start and end dates that matches these.

Our Protection Promise

All it takes is just over five minutes for most people to get a quote and decision from us. But if you apply for life insurance and we can’t give you an immediate decision, our Protection Promise kicks in. So you’re covered free of charge for the cover amount you’ve applied for, up to £500,000. This lasts until we’ve made our decision, you withdraw your application, or up to 90 days after we’ve confirmed your Protection Promise cover has started.

You can find out more about our home purchase cover and Protection Promise in our Life Insurance Plan policy summary.