Protect your home and loved ones with Mortgage Life Insurance
Mortgage life insurance is one way to ensure that your loved ones can continue to live in their home, once you’re no longer around. With mortgage life insurance, you can rest easy knowing that your family will always have a roof over their heads. And as the official health and mortgage protection provider for property search giants Rightmove, we can help you find the right cover for your requirements.
What is Mortgage Life Insurance?
We think of ourselves as specialists in risk assessments. Although we’re a positive, cheery bunch, we look towards worst-case scenarios, and find practical solutions that will prevent problems from escalating.
One of the most common conversations we have with clients is about mortgage life insurance. Namely, how would your family cope if you (or your partner) were to pass away? Would you be able to continue meeting your mortgage payments if you rely on two incomes?
No one should ever have to worry about losing their home while also coping with a bereavement.
That’s where mortgage life insurance can be a crucial lifeline to make an awful time a little bit easier.
Mortgage life insurance is designed to remove the worry over how your family will afford mortgage payments if you pass away. Unlike a whole of life insurance policy, mortgage life insurance lasts for a set period of time. This is called term life insurance.
Should you pass away during the term of your mortgage life insurance, your family will receive a tax-free lump sum that can be used to pay off the rest of your mortgage.
How does mortgage life insurance work?
Mortgage life insurance is a type of term life insurance that will pay off your mortgage balance, should you die. In most cases, your term length (which is how long your policy will last) will match the term of your mortgage.
For example, if you’ve taken out a 25-year mortgage loan, your policy will likely match that timeframe.
There are two types of term life insurance: level term and decreasing term.
With level term life insurance, your monthly premiums and the lump sum payout remain the same throughout the policy’s term. This means that you can budget for your insurance payments and avoid any unexpected changes in cost. However, level term life insurance premiums are generally higher than those for decreasing term life insurance.
Decreasing term life insurance provides a lump sum amount that decreases over time, in line with the way a repayment mortgage decrease. Your monthly premiums are guaranteed and won’t change over the term of the policy
Understanding the difference between level term and decreasing term life insurance is important when it comes to protecting your mortgage. If you have an interest-only mortgage, level term life insurance may be more suitable for you. If you have a repayment mortgage, decreasing term life insurance may be a better fit.
We’ll never expect you to know all the details, nor the ins and outs of each option. With our support, we can answer any questions you may have, and work with you to help you figure out what type of insurance plan is right for you.
You can take as much time as you need – we’re always here to help.
How much does mortgage life insurance cost each month?
The cost of mortgage life insurance will vary depending on your personal circumstances, such as your age, health, family medical history, lifestyle, and details of your mortgage.
Let’s look at two examples of customers who want to buy mortgage life insurance cover:
Mortgage Life Insurance Example Cost #1
John is a software engineer who is married with two children. He is 35 years old and a non-smoker. He and his wife have just bought a new house. The outstanding mortgage amount is £200,000 with a term of 25 years. He wants to make sure that his family is financially protected, should he die.
John decides to take out a level term policy with a payout amount of £200,000 over a term of 25 years.
John’s monthly premiums are £10.08. John would pay £120.96 per year.
£10.08 per month | £200k payout
Mortgage Life Insurance Example Cost #2
Helen is 45 years old. She is an accountant. She is married with one child. She has an outstanding mortgage of £100,000 over 15 years. She is a cancer survivor and was given the all-clear two years ago. She has a family history of cancer. She decides to take out a decreasing term policy with an initial £100,000 payout over 15 years.
Helen’s monthly premium starts at £6.61 .
Her payout starts at £100,000 and also decreases over time.
At the start of the policy: £6.61 per month and £100k payout
As you can see, the premiums differ for both scenarios.
When it comes to life plans, it’s essential to have a policy built around you – not a one-size-fits-all approach that may not give you the cover you deserve.
With our help, we can talk through the available options and build a policy plan that gives you all the protection you need to safeguard your home.
How to get mortgage life insurance?
Many mortgage providers may require life insurance as part of their conditional offer. However, it’s important to choose the right policy for your needs rather than taking the only option available from your mortgage lender.
At The Insurance Surgery, we offer mortgage life insurance cover that is tailored to your specific requirements. That’s why we don’t give online quotes. Instead, we have a friendly phone chat with you to find the best policy for your needs and budget.
When you contact us, we’ll do our best to find out more about you and your mortgage protection needs. We’ll ask you questions like:
- How old are you?
- What is your job?
- Do you smoke or drink alcohol?
- What is your medical history?
- How much cover do you want?
- How long do you want the cover to last?
- How much is outstanding on your mortgage?
Then we’ll search our network of trusted insurance providers to find the most suitable policy for you. We often have access to exclusive deals that aren’t available to the general public.
We’ll provide you with a free, no-obligation quote that reflects the best value for your money. Our price promise means that you won’t find a cheaper quote anywhere else. If you’re happy with the quote, we’ll get your policy started as soon as possible. And we’ll continue to support you, answering your questions along the way.
Maximise your mortgage life insurance with income protection or critical illness add-ons
Protecting your home isn’t just about finding an insurance plan that will pay off the policy if you were to pass away. It’s also about finding a solution that will protect your repayments if you were unable to work.
We don’t ever want to see you struggle to keep up with your repayments if you were struck by illness or injury. Nor do we want to see you stressed and worried about how to pay the bills when you should be focusing on your health.
With our help, we can add on a critical illness plan or income protection policy that will safeguard your income and give you peace of mind that you can cope with your living costs.
Critical Illness Cover – If you were to suddenly get diagnosed with a serious illness, this cover will help you pay off some – or all – of your mortgage. This not only provides you with peace of mind but can also make a significant difference to your recovery.
Income Protection Cover – If you’re unable to work due to illness or injury, an income protection plan will provide you with a monthly tax-free income – designed to pay up to 70% of a working individuals annual pre-tax income. It will continue to pay out until you’re fit enough to head back to work. If you’re medically signed-off indefinitely, your IP cover could pay out until you reach retirement age (or the end of your policy term, whichever is first).
These add-ons may only cost a few extra pounds to your monthly premium.
But we think they are worth it, for the reassurance that your home will always be protected.
What happens to your life insurance when your mortgage is paid off?
Mortgage life insurance is designed to pay off your mortgage if you die within the term of the policy. If you pay off your mortgage before your insurance policy ends, you have four choices:
- Cancel the mortgage life insurance cover.
- Cancel the mortgage life insurance and take out a new life insurance policy.
- Continue with the mortgage life insurance and make no changes to the policy.
- Continue with the mortgage life insurance policy but adapt it to suit your current lifestyle.
At The Insurance Surgery, we are always happy to discuss your ongoing insurance needs to find the best possible option for you and your family.