What is mortgage life insurance?

In truth, there’s no difference between mortgage life insurance and life insurance.

Mortgage life insurance, also known as ‘mortgage protection life insurance’, isn’t a product in its own right.

It’s simply a standard life insurance policy taken out to protect a mortgage (usually in the form of decreasing term life insurance).

In this case, your policy can be aligned with your mortgage term and remaining balance to ensure there’s adequate cover for your loved ones should anything happen to you.

This can allow your loved ones to remain in their home after your passing.

Watch our mortgage life insurance video below:


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Keep reading to find out everything you need to know about life insurance for a mortgage in the UK, including:

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Do you have to have life insurance for a mortgage?

No, it’s not a legal requirement to have life insurance for a mortgage. However, it’s often advised by mortgage lenders and financial advisors.

This is due to the scale of the loan that’s being borrowed and the risk to loved ones, as well as the lender, if you were to pass away before it’s paid off.

As a result, many homeowners secure life insurance for mortgage protection.

It’s important to consider whether your family could afford to keep up with the monthly repayments if you were no longer around.

Key questions to ask yourself include:

  • Could your loved ones afford the mortgage without your income?
  • Or would your family need to downsize / move to a new area?
  • What affect would this have on your family’s lifestyle?
  • What about the daily running costs of your home?

We have a complete do I need life insurance for a mortgage guide if you’re going through the process of buying a house »

How does mortgage life insurance work?

Mortgage life insurance is a policy that’s specifically designed to help pay off your mortgage if you pass away during the policy term.

Here’s how it normally works when arranging life insurance to help protect a mortgage:

  1. Select a policy that best suits your needs. Many people opt for decreasing term life insurance for a mortgage as it’s usually the most affordable, however, there’s also the option of level term life insurance
  2. Choose how long you’d like to be covered for (the policy term). This should be aligned with your mortgage term - helping to protect your family, and home if anything were to happen to you during this period
  3. Choose a sum assured (pay out amount) to meet your requirements. The amount of cover you secure should mirror the outstanding balance of your mortgage
  4. During the policy term, you’ll need to pay a monthly premium. The amount you pay is calculated during the application process and is based on your health and lifestyle, as well as your chosen policy details
  5. If you pass away while your cover is in place, your loved ones can make a claim. The lump sum pay out could either help to pay off the remaining mortgage debt in full or allow your loved ones to continue meeting the monthly payments

A fee-free broker, like Reassured, can help you choose a mortgage life insurance policy that suits your needs, as well as provide you with quotes from multiple insurers, to help you find a good deal.

Simply get in touch for your free quotes.

How much life insurance do I need for a mortgage?

How much life insurance you require to cover your mortgage will depend on:

  • Your mortgage term - The length of your life insurance should reflect your mortgage term to ensure your loved ones could continue to make payments. For example, if your mortgage lifespan is 25 years then your policy could last for 25 years, or at least until your children are likely to reach financial independence (for example, at 21 years old)
  • Your mortgage balance - Your sum assured should at least be the same amount as your mortgage balance to ensure there’d be enough funds to clear the debt
  • Whether you have any other financial commitments - You may wish to leave an additional sum of money to help with the costs of running a home (such as council tax, transport and utilities) or to help with daily family living costs. The average UK household spends £2,700 a month on living expenses[3]

Mortgage life insurance UK calculator

How much cover do you need for a mortgage life insurance policy? Fill in the details below to calculate how much life insurance you may need to help protect your mortgage and other costs you’d like your policy to cover.

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£137,934 is the estimated mortgage debt per household in the UK.

The purchase of a home is likely to be the largest financial commitment any of us will make in our lifetime. Your life insurance should cover your remaining mortgage balance to allow your loved ones to stay in the family home should anything happen to you.

Source: Moneynerd.co.uk
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The average monthly household budget in the UK is £2,548 (that’s £30,576 per year), which is spent on transport, food & drink, utilities (gas, electricity, water etc), clothing, council tax and leisure activities.

With energy prices hitting a record high and the cost of living rising sharply in the UK, you may wish to factor in utility bills and family living expenses into your cover.

Source: Nimblefins.co.uk
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The average personal debt of UK adults has risen to £34,566 (not including mortgage debt), with credit cards, personal loans and overdrafts being the most common forms of debt.

Factoring in any debts into your life insurance cover means that, if they need to be paid back from your estate after your passing, your loved ones won’t miss out financially.

Source: Money.co.uk
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According to SunLife, the average cost of a funeral in the UK is £3,953 (with the overall cost of dying at £9,200).

Funeral costs have increased by 116% since 2004 and are a significant cost which should be factored into the amount of life insurance you secure.

Source: SunLife.co.uk
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When factoring in cover for your children, you may wish to calculate the amount based on how long it is until they reach financial independence.

This could include childcare (£7,000 per year for part-time care), school expenses (£1,519 per school year for uniforms, lunches, stationary etc), as well as an additional sum for further education (this could be a contribution of up to £5,000 per year).

Sources: Daynurseries.co.uk, Primarytimes.co.uk & Savethestudent.org
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2 in 5 adults say they are relying on an inheritance to fund their retirement.

Factoring in an inheritance to your sum assured could allow loved ones to live a more financially comfortable life. Alternatively, you could leave a cash gift to a charity of your choosing.

Source: Moneyage.co.uk
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If you’re lucky enough to have your own savings or are part of the 30% of UK residents who already have a life insurance policy in place, this can provide financial protection for loved ones.

By entering your current cover, savings or death in service amount you can reduce the sum assured you require.

Source: Scottishbusinessnews.net
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Which is the best mortgage life insurance?

The best life insurance for mortgage protection will depend on your personal needs and circumstances.

However, most commonly, term-based life insurance is taken out to help protect a mortgage.

This is because you can choose a policy term to mirror your mortgage term and you can also choose a sum assured to match your remaining mortgage balance.

Decreasing term with mortgage

Decreasing term mortgage life insurance

  • Decreasing term life insurance lasts for a specified period of time (the term), up to 40 years
  • The pay out sum reduces throughout the policy term
  • Pay out will only be made if you pass away during the term
  • Sum assured can be up to £1,000,000
  • Ideal for helping to protect a repayment mortgage (sum assured can reduce in line with your mortgage balance)
  • Terminal illness cover included at no extra cost
  • Often the cheapest form of life insurance
  • Premiums start from 20p-a-day through Reassured ¥
Level term with mortgage

Level term mortgage life insurance

  • Level term life insurance lasts for a specified period of time, up to 40 years
  • The pay out sum remains fixed throughout the policy term
  • Pay out will only be made if you pass away during the term
  • Sum assured can be up to £1,000,000
  • Could help to protect an interest-only mortgage (due to the large fixed pay out potential) or repayment mortgage
  • Terminal illness cover included at no extra cost
  • Could also help to cover other debts and family living costs
  • Premiums start from just 20p-a-day through Reassured †

Some lenders and financial advisors may also suggest the following policies to help protect your mortgage:

Critical illness cover with mortgage

Mortgage life insurance with critical illness cover

  • Critical illness cover can be added to both decreasing and level term life insurance for an additional fee
  • Provides a lump sum payment if you’re diagnosed with a serious illness or pass away during the policy term
  • Pay out could help you to keep up with mortgage payments if you’re unable to work
  • Illness must be listed in your policy and must meet the insurers definition
  • Could help you cover other costs such as private medical treatment
  • Life insurance with critical illness cover to help protect a mortgage available through Reassured from 33p-a-day º
Income protection with mortgage

Income protection for mortgage

  • Income protection insurance can be taken out separately or simultaneously to a life insurance policy
  • If you’re unable to work due to illness or injury you could receive monthly (tax-free) payments to help replace your income
  • Up to 70% of your usual earnings could be paid out (depending on the provider)
  • Payments can help you to keep up with mortgage payments while you’re unable to work
  • A wide range of illnesses and injuries are covered
  • Read our mortgage income protection article to find out more
  • Available through Reassured's advised team from 20p-a-day ‡

Again, it isn’t a legal requirement to secure either of these policies to protect your mortgage - however they can provide additional cover should anything happen to you.

The best mortgage life insurance to meet your needs will depend on the type of mortgage you have, as well as other financial commitments and your available budget.

Reassured can help you conduct a full level term vs decreasing term life insurance comparison using our FCA-regulated broker service.

We can also help you to compare mortgage life insurance with critical illness cover.

Simply get in touch for your free quotes.

How much is mortgage life insurance per month?

Mortgage life insurance can be secured through Reassured from just 20p-a-day.

However, the exact cost of mortgage life insurance will depend on your personal circumstances.

During the application process, you’ll be required to provide key information in order for insurers to calculate your life insurance premium. This includes:

Personal details:

Policy details:

  • Policy type
  • Policy term
  • Sum assured

The table below shows some example monthly mortgage life insurance quotes.

In 2024 the average mortgage in the UK is £132,378[1], and the average mortgage term is 25 years[2].

Therefore, our quotes are based on £200,000 of cover, over a 25-year term, for a non-smoker (in good health):

AgeDecreasing term mortgage life insuranceLevel term mortgage life insurance
20£4.70£4.72
25£5.30£6.03
30£6.04£7.86
35£7.58£11.25
40£10.87£16.48
45£17.25£26.08
50£26.15£41.23

The cost of mortgage life insurance will vary depending on your personal circumstances.

Securing cover at a younger age can help you to lock in the most favourable premium price.

If your mortgage is less than the example used above, it could be possible to secure a cheaper premium price.

Comparing quotes could help you save money, why not let Reassured help you compare free quotes?

We can help you compare mortgage life insurance quotes from leading UK providers starting from just 20p-a-day.

Compare Mortgage Life Insurance Quotes » Save Money

Should I take out joint mortgage life insurance?

Often a property purchase is more achievable if you take out a joint mortgage with a spouse, partner or friend.

In this case, you may wish to secure a joint life insurance policy to protect your shared asset.

Securing a joint life insurance policy can often help you save money, as there’s only one premium to pay on a policy that protects both lives and one potential pay out if either person passes away.

The table below shows the price comparison between a joint mortgage life insurance policy vs two single policies.

Quotes are based on a decreasing term life insurance policy for £200,000 of cover, over a 25-year term for non-smokers in good health:

AgeJoint mortgage life insurance price per monthTwo single policies price per month% Saving
20£6.14£9.4035%
25£7.36£10.6031%
30£9.32£12.0823%
35£12.12£15.1620%
40£17.92£21.7418%
45£30.21£34.5012%
50£46.43£52.3011%

As you can see from the table, taking out a joint mortgage life insurance policy could help you make a substantial saving on your cover.

However, joint life insurance will only provide one potential pay out (usually after the first death) during the policy term.

Therefore, if you have other dependents (such as children), it could be more beneficial to take out two separate policies to provide two pay outs.

A friendly member of the Reassured team can compare joint mortgage life insurance vs two single policies to help you find the right life insurance to protect your mortgage.

Simply get in touch today.

Is mortgage protection insurance the same as life insurance?

No, mortgage payment protection insurance (MPPI) and mortgage life insurance are two separate products.

The difference between mortgage protection and life insurance is that one pays out while you’re alive if you’re too ill or injured to work, and the other pays out if you pass away during a set term.

MPPI works in a similar way to an income protection policy, as it will pay out to you each month to help cover the cost of your monthly mortgage payments while you’re unable to work.

Whereas mortgage life insurance will pay out a lump sum to your loved ones after your passing to help them pay off the mortgage (or keep up with the repayments) and remain in their home.

Mortgage payment protection insurance isn’t currently offered by Reassured, but we can help you compare life insurance as well as income protection quotes to help protect your mortgage should the unexpected happen.

What happens to life insurance when a mortgage is paid off?

What happens to your life insurance policy once your mortgage is paid off will depend on your chosen policy term.

If you’ve taken out a policy specifically to help cover your mortgage, then your life insurance should expire in line with your mortgage.

If you’ve chosen a longer policy term to help cover other expenses and you keep paying your monthly premiums, then your life insurance will continue until:

  • You pass away (within the term)
  • You’re diagnosed with a terminal illness (within the term)
  • Your policy term comes to an end

When your mortgage is paid off and your policy has come to an end, you may choose to take out a new life insurance policy to suit your new circumstances.

Some options include over 50s plan or whole of life insurance, which could both help to provide an inheritance or a contribution towards funeral costs.

What happens to my life insurance if I re-mortgage?

If you re-mortgage, you’ll need to ensure that your current life insurance policy still meets your requirements.

It’s common for people to re-mortgage for any of the following reasons:

  • To acquire additional funds to develop your current home
  • To move to a bigger, more expensive property
  • When your existing mortgage expires (reverting to a more expensive standard variable rate)

To ensure your loved ones could afford your new mortgage, if you were to pass away, you could:

  • Contact your insurer and inform them of the changes. If your policy includes a ‘special events option’ (also known as the guaranteed insurability option) you may be able to increase your cover amount without having to provide any additional medical information. Your premium will increase in line with your new sum assured
  • Compare quotes for a new policy which meets your new needs. You could either cancel your existing policy and replace it with a new policy, or you could take out an additional policy which helps to ‘top up’ your existing cover. The latter could be a more cost-effective option

It’s best to explore both of these avenues to make sure you’re getting the best deal and not paying over the odds for cover.

Reassured can help you compare life insurance quotes for a mortgage from a panel of insurers to help you find an affordable policy. Simply get in touch.

Compare Life Insurance for a Mortgage »

Can I write my mortgage life insurance in trust?

Yes, you can write your mortgage life insurance policy in trust.

Writing your policy in trust is a legal arrangement designed to ensure that the pay out from your policy is distributed as you intended.

When writing your life insurance in trust, your policy will be transferred to a named trustee/s (of your choosing) after your passing, who will then distribute the funds as per your wishes.

This process also means your policy won’t form part of your estate.

The key benefits of writing your mortgage life insurance policy in trust are:

  • Avoid/minimise 40% inheritance tax for your loved ones (over the £325,000 threshold)
  • Avoid-minimise a lengthy probate process (for a faster pay out)
  • Have more control over who gets the funds and when

This could mean that your loved ones receive a greater sum to help pay off the mortgage, at a faster pace to allow them to continue with payments as soon as possible.

At Reassured we’re able to offer a free trust writing service on the majority of the policies we arrange.

Our dedicated team can help you fill out the necessary forms and unpick any confusing insurance jargon.

Do you need life insurance if you don’t have a mortgage?

If you’re single, and don’t have any dependents, you may not require mortgage life insurance.

If there’s no one you’d like to pass your property onto then this type of protection may not be necessary.

In this instance, if you were to pass away, your property would go to the government by default.

However, if you’d like to keep your home in the family or pass it onto a friend, life insurance could allow you to keep on your legacy by providing a lump sum pay for your loved ones to help cover your mortgage costs.

Why not read our life insurance for a single person guide to find out whether life insurance is right for you?

Alternatively, you can get in touch for personalised and no-obligation quotes.

Mortgage life insurance for seniors

Whether you’re securing your first mortgage, or are obtaining a new mortgage to downsize from your family home, there are still options available to those over the age of 50.

If you’re in good health, it could still be affordable for you to take out either of the term life insurance options mentioned above to help protect your home.

However, over the age of 50, you may also consider types of life assurance.

Life assurance provides lifelong cover and guarantees a pay out when you pass away. The funds could help repay some of the mortgage, or on anything your family choose.

Over 50s plan with mortgage

Over 50 life insurance:

  • Over 50 life insurance lasts for life and guarantees a pay out to your loved ones
  • Acceptance is guaranteed to UK residents aged 50 - 85
  • No medical information is required during the application process
  • Ideal for those who have previously struggled to secure cover due to poor health
  • Sum assured is significantly smaller (often capped at £20,000, depending on your personal circumstances and budget) so may not be sufficient to cover the full cost of a mortgage
  • Available through Reassured from 20p-a-day +
Whole of life insurance with mortgage

Whole of life insurance

  • Whole of life insurance lasts for life and guarantees a pay out to your loved ones after your passing
  • Medical information is required during the application process
  • Well suited to those over 50 who are still in good health
  • Sum assured is much greater than an over 50s plan (up to £1,000,000)
  • This could help you to protect your mortgage and funeral costs, as well as leave an inheritance
  • Available through Reassured's advised team from 27p-a-day ±

Due to the smaller pay out from over 50 life insurance it may not be sufficient to cover the full cost of a mortgage.

However, if you only have a small portion of your mortgage left to pay, the pay out from an over 50s plan could help to cover this.

Alternatively, whole of life insurance can allow you to provide a much larger pay out for your loved ones - although this could be costly if you have a pre-existing medical condition.

To compare over 50s mortgage life insurance, contact Reassured.

A friendly member of the team will be able to provide you with all your available options to help you find a suitable policy to protect your mortgage.

Mortgage debt in the UK

Many of us rely on a mortgage to purchase our home - in fact, there are around 6.8 million mortgaged homes across the UK[4].

With outstanding mortgage debt currently at £132,378[1] and with 1 in 3 adults having less than £1,000 in savings[5], it’s easy to see the importance of having the right protection in place.

If you were no longer around to help pay the mortgage, what would happen to the family home?

Unfortunately, 55.8 mortgage possession claims and 35.2 mortgage possession orders were made every day in England and Wales in April to June 2024, as a result of families not being able to keep up with mortgage payments[6].

But did you know you can protect your family and your home from as little as 20p-a-day?

Compare mortgage life insurance quotes

For most of us, our home is the single largest investment we’ll ever make.

More importantly, it provides a roof over our loved one’s heads.

The good news is you can secure your family’s home and their financial future by taking out mortgage life insurance.

Remember, don’t feel pressured to take out cover through your lender or financial advisor’s preferred insurer - you can secure a policy with whoever you like.

So why not compare mortgage life insurance quotes through Reassured?

We work with a panel of top providers, meaning we can help you find the right policy to meet your needs at the best price we can offer.

All quotes are personalised, no obligation and completely fee-free.

Compare Mortgage Life Insurance » Find Our Best Quote

Sources:

[1] https://www.finder.com/uk/mortgage-statistics

[2] https://www.moneyhelper.org.uk/en/blog/buy-or-rent-a-home/should-you-get-a-30-year-or-longer-mortgage

[3] https://www.nimblefins.co.uk/average-uk-household-budget

[4] https://www.mpamag.com/uk/mortgage-types/residential/fewer-homeowners-rely-on-mortgages-research-shows/391321

[5] https://www.money.co.uk/savings-accounts/savings-statistics

[6] https://themoneycharity.org.uk/money-statistics/

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