What is the difference between life insurance and mortgage protection?

I am looking for some insurance to protect my mortgage and have seen insurers offering mortgage protection plans, is this the same as life insurance cover? I ideally want to cover death and illness.

Question asked by Sally Bishop
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Answered by Tom Conner

Mortgage protection insurance is often used as a general phrase to categorise the various types of mortgage insurances available in the market, one of which being life cover.

The main types of mortgage protection consist of the following:

Mortgage Life Insurance – This type of cover pays out a lump-sum to repay the loan in full should you pass away during the policy term. If taken out as a joint plan the policy would payout should either partner pass away.

Critical Illness Cover – This type of cover is often added to mortgage life insurance so that the plan can payout not only upon death but also if you were to suffer a serious illness or injury. Most plans specify around 35 conditions covered, including cancer, heart attack and stroke.

Mortgage Payment Protection – This plan provides a monthly benefit to cover your monthly repayments should you have to take time out of work due to accident, sickness or unemployment. Policies can usually payout for a maximum of 12 consecutive months.

If you were to combine all three plans this is sometimes referred to as ‘total mortgage protection’ as your loan would be covered for short- and long-term accident & sickness, short-term unemployment and death.

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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.
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