Mortgage life insurance

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What's mortgage life insurance?

Mortgage insurance (also known as decreasing term) offers a payout that decreases over time. It can be used to cover outstanding debts, for example your mortgage, if you die before they're paid off. It means your partner and/or dependants aren’t burdened with having to meet the mortgage repayments without your financial support.

What’s the difference between mortgage life insurance and level term life insurance?

Mortgage life insurance is specifically designed to cover outstanding debts if you die. Because the amount you owe on your mortgage decreases with time, the payout amount usually decreases in line with this too.

Level term life insurance is different. It pays out a fixed cash lump sum to your beneficiaries if you die at any point in the policy term. The payout doesn't decrease.

Which do I need?

It depends on your circumstances. Often, people choose to get decreasing term life insurance alongside level term insurance. That way, any outstanding debt on the mortgage is covered and additional money is available as a payout to support loved ones too.

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Where should I buy mortgage cover?

You can buy mortgage life insurance from your mortgage provider, estate agent or you can buy it direct from an insurer for yourself. When you buy a house, they'll ask you about it. However, the person selling you the policy will get a commission for each one sold.  You’ll probably be able to find a more cost-effective and suitable product by shopping around and comparing your options first. 

Don’t pay for cover you don't need

You might not need mortgage life insurance if you already have another life insurance policy in place that offers a sufficient payout to clear your mortgage debt. For example, your employer might offer death in service cover, and that's enough to cover your outstanding debts.

That been said, it's possible to have multiple life insurance policies - and in some circumstances this might be the right option. For example, if you want to make sure your mortgage is paid off and you want to leave a lump sum for your beneficiaries.

Pros and cons of decreasing life insurance


  • Monthly premiums are often lower for decreasing term insurance than with other types of life cover. This is because the amount of money an insurance provider needs to cover you for reduces over the course of a policy
  • This means it's a good option if you have a repayment mortgage or if you have children. The amount of payout you’d need them to receive – if you or your partner were to die unexpectedly – might reduce as they grow up and become more self-sufficient


  • Decreasing term life insurance won't work for you if you have an interest-only mortgage. This is because the money you originally borrowed (the capital debt) is only repaid at the end of the mortgage term
  • You should consider that, as time passes, any claim on a decreasing life insurance policy will be worth less. Make sure the payout amount doesn't decrease faster than your outstanding mortgage debt because of inflation too

Mortgage life insurance isn’t compulsory

If you die with outstanding debt on your mortgage, it’ll be paid off from your estate if you don’t have insurance to cover it. So if you haven’t got dependants, or your estate has enough money to cover the cost, you might not need mortgage life insurance.

It could still be a good time to consider writing or updating a will. If you do decide you need mortgage live insurance, consider writing your policy in trust. This usually means your beneficiaries get a quicker payout. The payout should be exempt from inheritance tax too, depending on your circumstances.

Compare life insurance the easy way

We can help you find the right life insurance for you at the right price, so your family aren't left with payments they can't afford

  1. Getting started

    Choose the amount of cover you need and the length of time you'd like to be covered for

  2. A bit about you

    Just a few details about you - it'll take about ten minutes

  3. Get the cover you need

    Choose the best option for you and sit back knowing your family are protected

Compare mortgage life insurance prices and get the cover to suit you

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Switching mortgage life insurance provider

It's worth comparing your options – switching providers could be to your advantage, but you also need to be careful. Life insurance is more expensive for older people or those with health conditions, so you’ll have to pay more if you're looking to arrange cover later in life. 

For that reason, it's more common to keep your existing life insurance policy in place, and buy additional cover if your circumstances change.

Life insurance calculator

Use our calculator to get an idea of how much life insurance might be right for you

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[1]For comparing quotes online, introduces customers to Neilson. Which is a trading name of Neilson Financial Services Limited who are authorised and regulated by the Financial Conduct Authority no. 594926.'s relationship with Neilson Financial Services Limited is limited to that of a business partnership, no common ownership or control exist between us.

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