Do you need Life Insurance for a mortgage? Is it compulsory?

I’m looking to take out a mortgage, but can I get one without getting Mortgage Protection Insurance? What happens to my mortgage if I die and don’t have Life Insurance?

Question asked by Ben Pound
Compare Top 10 UK
 Protection
Insurers
 
Takes approx. 60 seconds
Type of Policy
Level of Cover
per
month
Date of Birth
Loading your options...
Thank you for using our Quote Tool
If you need some help, just call us!
T: 02084327333
Our in-house Experts are here to provide Whole of Market Advice!
Our Experts can answer all your questions
Our Experts can send you more appropriate options based on your personal circumstances

Very important if you are either Self-Employed or a Company Director.

Our online quote tool is good but our Experts are better

Oue Experts have access to far more insurers and can often find a better deal offline.

Saves you time, let our Experts do what they are best at

Answered by Tom Conner

Although it usually makes sense to consider taking out Life Insurance to cover your mortgage loan, it is not normally compulsory. Provided you pass the affordability tests, you can still get a mortgage from a lender regardless of whether you have insurance.

However, even if it isn’t compulsory, there are some very good reasons to purchase protection for your mortgage, particularly if you have a family or are the main contributor to mortgage repayments in your household.

 

What is Mortgage Life Insurance For?

If you pass away without paying off your mortgage and do not have Life Insurance to cover the cost, the lender / bank would be able to reclaim the remaining loan amount from your personal estate. If you don’t have the funds to pay off the loan, the property may have to be sold to repay the debt. Alternatively, your family may have to keep paying the monthly repayments to stay living in the home.

If you want to pass on your home to your loved ones without passing on your debt, a Life Insurance policy can cover what’s left of the loan. A Life Insurance policy will pay out a lump sum that is typically set at equal value to your mortgage so that the whole loan can be paid off in one go, leaving your loved ones free of a mortgage if you pass away.

 

Why You Might Need Mortgage Life Insurance

You have no obligation to purchase a Life Insurance policy when you take out a mortgage, but if you have a family or loved ones that you hope to leave your home to after you die, you might want to consider purchasing a policy anyway.

With the payout from a Mortgage Life Insurance policy covering what’s left of your mortgage debt, your loved ones can stay in their home and don’t have to worry about keeping up with repayments.

If you have taken out a joint mortgage with your spouse or partner, you might consider taking out a Joint Life Insurance plan instead of a standard plan that will only cover one policyholder. This type of policy would pay out a lump sum if either partner passed away to cover the mortgage.

 

What Other Insurance Might You Need?

A Mortgage Life Insurance will help your loved ones cover the mortgage if you die, but that still leaves the risk of you being unable to meet your mortgage repayments while you are alive.

If you are unable to work due to illness or injury, your reduced income means that it will be more difficult to meet your mortgage repayments. To combat the risk of this happening there are insurance products like Critical Illness Insurance and Income Protection Insurance. These will pay out either a lump sum or monthly benefits to help you cover the cost of your mortgage.

If you are interested in protecting your mortgage for the sake of yourself as well as your loved ones, you have the option to take out a combined Life and Critical Illness Mortgage Protection policy. This will pay out a lump sum to cover your mortgage debt if you are diagnosed with a critical illness, diagnosed with a terminal illness, or if you pass away before you have paid off your mortgage. Buying a combined policy is usually more cost effective than buying the two products separately.

Robert Harvey, Independent Protection Expert at Drewberry

There are a range of insurance products to help you and your loved ones protect important financial commitments like a mortgage and there are a lot of policy options to choose from to help you find one that best matches your needs.

If you’re interested in learning more about available or getting quotes from the top UK insurance providers, contact us today on 02084327333.

Robert Harvey
Head of Protection Advice at Drewberry

Mortgage Life Insurance
 
Mortgage Protection Insurance
 
Life Insurance
 
This information does not constitute financial or other professional advice. You should consult your professional adviser or contact us directly on 02084327333 should you require financial advice. It is important to ensure any insurance policy you take out is suitable for your needs.
Compare Top 10 UK Insurers
  Takes approx. 60 seconds
 - 
Need help? 
Call us on 

Frequently Asked Mortgage Protection Insurance Questions

 
I am currently arranging a mortgage with my partner and someone suggested taking out joint life insurance...
 
How can I insure my mortgage against the risk of illness or accident? Is there a type of cover that would...
 
I’m looking to take out a mortgage, but can I get one without getting Mortgage Protection Insurance?...
 
I have just bought a new house and wanted to take out life insurance with my wife for mortgage protection...
Need Help? Live chat now and get an instant answer from our Experts...

Neil
Pensions

Victoria
Insurance
Our Latest Reviews
Trevor Massey
22/01/2019

Excellent service from start to finish. Both Jack & Jake were both helpful and polite through the process. I would recommend Drewberry to family and friends.

Adriana Fouche
31/01/2019

Oliver was great at explaining things, with patience. He called back when he said he would, and spent a lot of time to make sure the policy meets my needs.

Robin Condliffe
12/02/2019

Victoria Slade has been consistently prompt, personable, efficient and a great communicator. It is the first time that we have had straightforward dealings with financial services since becoming qualified doctors 20 years ago. Well done!

We are rated 4.9/5 based on 2024 independent client reviews.
To read more of our independent client reviews click here →
REVIEWS
EXCELLENT
4.92 / 5 Average
2024 Reviews
H CONDLIFFE
Overall Rating
Victoria Slade has been consistently prompt, personable, efficient and a greta communicator. It is the first time that we have had straightforward dealings with financial services since becoming qualified Drs 20 years ago. Well done!
K Szymkiewicz
Overall Rating
Rauri Taylor is Independent Protection Expert who you want to help you with any Pensions, Investments & Insurance. He helped me made right choice.
S Brocklehurst
Overall Rating
Professional service, Oliver seemed genuinely interested in getting the right product for me. I was given plenty of options and everything was described fully when required. I felt no pressure to purchase a product.
G Bigga
Overall Rating
Helpful, knowledgeable and efficient and able to find great prices. I would highly recommend
N Lawton
Overall Rating
Everything was very well organised. Sam took the time to explain all of the options very thoroughly so that I could choose the right policy.