Life insurance – peace of mind for your family

Life insurance is not a legal requirement when taking out a mortgage, and lenders will not insist that you have it in place. However, it is widely recommended because it can help ensure the mortgage is repaid if you die during the policy term.

Without life insurance, your partner, family, or dependants may still be responsible for ongoing mortgage payments if you were to pass away. In some cases, this could create significant financial pressure or even result in the need to sell the property. Life insurance can therefore provide valuable financial reassurance, particularly if you have children, dependants, a joint mortgage, or a household that relies on your income.

The right type and level of cover will depend on your personal circumstances, financial commitments, existing savings, and any workplace benefits you may already have in place.

As a starting point, many people choose enough life insurance to repay the outstanding mortgage balance in full if they die during the mortgage term.

However, mortgage protection alone may not always provide sufficient financial support for your family. If you have dependants or ongoing financial commitments, you may also wish to consider additional cover to help replace lost income, cover childcare or education costs, repay other debts, or maintain your household’s standard of living.

The amount of cover that is right for you will depend on factors such as your mortgage balance, income, family circumstances, existing assets, and any death-in-service benefits provided through your employer.

A mortgage and protection adviser at MAPIO Financial can help assess your circumstances and recommend a suitable level of cover based on your needs and budget. All recommendations are subject to eligibility, underwriting, and insurer terms and conditions.

The main difference between these two types of life insurance is how the payout changes over time.

With level term life insurance, the amount of cover remains the same throughout the policy term. For example, a policy with £250,000 of cover would pay the same amount regardless of when a claim is made during the term. This type of policy is often used to protect interest-only mortgages, provide family financial protection, or cover other fixed financial commitments.

With decreasing term life insurance, the amount of cover gradually reduces over time, usually in line with the balance of a repayment mortgage. Because the potential payout becomes smaller as the years pass, premiums are typically lower than level term cover.

Decreasing term life insurance is commonly chosen for repayment mortgages because it can offer a more cost-effective way to help ensure the outstanding mortgage balance could be repaid if the policyholder dies during the term.

The most suitable option will depend on your mortgage type, financial goals, and wider protection needs.

The cost of life insurance depends on a range of factors, including your age, health, medical history, smoking status, occupation, the amount of cover required, and the length of the policy term.

In general, younger applicants and non-smokers in good health are likely to benefit from lower premiums. As a broad guide, a healthy non-smoker in their 30s may pay from around £5 to £20 per month for decreasing term life insurance designed to cover a typical residential repayment mortgage. However, premiums can vary significantly depending on individual circumstances and the type of policy selected.

A broker can compare policies from a range of insurers to help you find suitable cover that balances affordability, features, and flexibility for your situation.

All premiums are subject to underwriting, eligibility, and insurer terms and conditions. Any prices mentioned are illustrative only and not guaranteed.