Life Insurance
Do You Need Life Insurance With a Mortgage?
In most cases, lenders will not make you take life insurance. But if you passed away, could your family keep the home? Here is how mortgage life insurance works and how to choose the right cover.
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Your home may be repossessed if you do not keep up repayments on your mortgage.
There may be a fee for mortgage advice. The actual amount you pay will depend upon your circumstances. The fee is up to 1% but a typical fee is 0.3% of the amount borrowed.
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Why It Matters
It Is About Who You Leave Behind
Life insurance pays out if you die during the policy. It can clear the mortgage so your family can stay in the home.
- ✓Not compulsory: most lenders do not insist on it
- ✓Peace of mind: the mortgage can be paid off if the worst happens
- ✓Joint or single: cover one person or both
- ✓In trust: can help the payout go to the right people quickly
How We Help
How to Choose Cover
Five things to think about.
How Much
Usually enough to clear the mortgage, sometimes more for family needs.
How Long
Match the term to your mortgage or until the kids are grown.
Level or Decreasing
Decreasing cover falls with a repayment mortgage. Level cover stays the same.
Critical Illness
Pays out on diagnosis of certain serious illnesses. Worth considering.
Write It in Trust
Can help the payout reach your family without delays.
Types of Cover
Which Cover Is Right?
Most families use a mix.
Common Questions
Life Insurance Questions, Answered
The things homeowners ask us most.
Do I need life insurance to get a mortgage?
Most lenders do not insist on it, but it is strongly worth considering if anyone relies on you.
How much life insurance do I need?
At least enough to clear your mortgage. Many people add more to cover family costs.
What is the difference between level and decreasing term?
Decreasing cover falls over time with your mortgage. Level cover stays the same.
Should we get joint or single policies?
Single policies cost a bit more but can pay out twice. Joint policies pay once.
What does writing a policy in trust mean?
It means the payout goes to the people you choose, often more quickly.
Is critical illness cover worth it?
It can be. Serious illness can stop you working, and it pays a lump sum on diagnosis of covered conditions.
Related guides
- Income protection explained
- Buying a house in Scotland step by step
- Family support and guarantor mortgages
- All mortgage questions answered
Written by Tony Flynn, mortgage broker at Tony Flynn Mortgages, helping homebuyers across Lanarkshire and Scotland. This page is general information, not personal advice. Speak to Tony about your own circumstances.
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Fill in the form and we will be in touch within one working day. We will look at your mortgage and family and tell you straight what cover makes sense.