What is Mortgage Life Insurance?
Mortgage Life Insurance is sometimes called Mortgage Protection Insurance.

However, this can be confusing because Mortgage Protection Insurance is different to Mortgage Payment Protection Insurance – the difference is explained below.

STEP 1 of 2
Type of cover
Life Insurance       Mortgage Life Insurance
 
Cover Level (£)

Number of years
Do you want:  
Critical illness cover
Family income benefit
 

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Will the Mortgage Payment Protection Insurance pay your interest and capital?
You decide how much you want the insurance to pay out each month if you’re off work. So make sure your cover is sufficient to meet your full monthly repayment to your mortgage provider.
Are There Any Situations That Would Result In My Claim Being Refused?
Yes there are the usual exclusions. These are summarised below but you should carefully read the paperwork that comes with your insurance documents.
Is Mortgage Payment Protection Insurance the same as a Mortgage Insurance Guarantee?
No. Mortgage Payment Protection Insurance is totally different to a Mortgage Insurance Guarantee.
Should you insure for accident and sickness or accident, sickness and unemployment?
The Mortgage Payment Protection policies we offer gives you the option of insuring yourself for:
How long should you insure for?
For mortgage protection purposes you should also insure yourself for the same number of years that are remaining on your mortgage. The initial sum insured should always equal the capital sum outstanding on your mortgage.
Mortgage Life Insurance ensures that your repayment mortgage would be repaid if you died during the policy’s term. Under the conditions of your policy, the money can be sent to your next of kin or direct to your mortgage lender.

All the Mortgage Life Insurance policies we sell include Terminal Insurance at no extra cost. With Terminal Insurance, if you had an illness or condition from which your Doctor expected you to die within 12 months of diagnosis, the policy would pay your mortgage off immediately you were diagnosed - it does not wait for you to pass away. This clearly reduces the stress during a very stressful time.

Before you can get a quotation for Mortgage Life Insurance, you will be asked whether your mortgage is an interest only mortgage or a repayment mortgage. This is because, if you have a repayment mortgage, the sum you need insured decreases as your mortgage repayments reduce the sum outstanding to your mortgage lender. Therefore, you need insurance that reduces the sum insured in line with the sum owed to you mortgage lender. This is exactly what Mortgage Life Insurance provides.

When you have an interest only mortgage, the sum owed to your mortgage provider remains constant as your monthly repayments only repay the interest due and not any of the capital you borrowed. In these circumstances you need normal, level cover, life insurance.

All proceeds from insurance policies are tax-free.

If your mortgage is held under joint names both mortgagees should be insured. The cheapest way to achieve this is with a Joint policy. (some mortgage providers will insist on this).

For mortgage protection, Joint policies are always written on “first life”. This means that the policy will pay out if either of the policyholders were to die whilst the policy is in force. (It is important to note that once a Joint policy has paid out on a first death, the policy is terminated – it will not pay out again if the second person were to die.)

As Mortgage Life Insurance provides steadily decreasing cover, it is much cheaper than normal Life Insurance which provides level cover.

Please note that all forms of Life Insurance never have any investment value. Once the policy comes to the end of its term, that’s it, the policy is finished.

PLEASE NOTE:
If you need insurance that pays your monthly mortgage repayments if you were off work through sickness, accident or unemployment, then you want Mortgage Payment Protection Insurance.

If you want insurance that totally repays your outstanding mortgage if you became critically ill, you need Critical Illness Insurance.

Frequently Asked Questions related to the above topic.
Click below if you wish to read them: -