Life Cover

What Is Life Cover Mortgage Protection?

Life Cover Mortgage Protection is a specific funding solution, designed specifically to pay off or reduce your outstanding mortgage balance if you die during the policy term. The goal of life insurance for mortgage protection is to provide a clear financial safety net for your dependents.

Unlike other life insurance plans in the UK, a life insurance mortgage protection plan is linked to your mortgage obligations. So, if the policyholder dies during the term of the cover, the dependants will get a sum that can be used to settle the mortgage. 

• Dependants don’t need to make mortgage payments in your absence

• There’s no risk of losing the family home

• No financial strain during an emotional period

Types of Life Insurance for Mortgage Protection

Decreasing Term Cover

One of the most commonly used life insurance mortgage protection in the UK is decreasing term cover. Under this type, the payout of the policy decreases in line with your mortgage balance. 

Level Term Cover 

With this plan, your monthly payouts remain the same throughout the policy term. Meaning, the additional funds after the death of the policyholder can support other family expenses or debts.

Joint Life Cover 

This plan is designed to cover two people under a single plan. The payout is made on the first death, thus helping the surviving partner with no burden of paying mortgage payments alone.

Costs and What to Expect

The cost involved for a life insurance and mortgage protection​ may vary based on several factors, some of which include:

• Age — younger applicants generally pay lower premiums

• Health and lifestyle — smokers often pay higher than non-smokers

• Term length — longer terms are typically more expensive

• Total amount of cover required

How Much Cover Do You Really Need?

One of the most common problems people face when opting for life insurance for mortgage protection​ is calculating the total cover required. So, you can begin by considering the outstanding mortgage balance and your remaining term on your mortgage. This allows you to calculate the amount you need to pay back the current mortgage. Along with this, you can also calculate a partner’s or family’s income needs and other financial commitments or debts.

The key here is to get advice from a professional mortgage broker in the UK who can help match your cover to your mortgage balance. 

Need help? AWS Private Finance is ready to be your guide.