What type of life insurance do I need for an interest only mortgage?

Is there such a policy as interest-only mortgage life insurance? I am looking for life insurance to pay-off our mortgage if either myself or my wife were to pass away but there seems to be more than one type of mortgage life cover.

Question asked by Luke Tarry
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 FREE impartial 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

Yes, it is possible to take out life insurance specifically to cover an interest only mortgage. For this type of protection it is usually best to take out level term mortgage life cover.

With an interest only mortgage the level of debt outstanding on the loan remains fixed over time as only interest on the loan is being paid. As the level of debt remains fixed over time so should the level of cover on your life insurance plan.

How does level term insurance work?

With level term insurance the amount of cover remains fixed over time so it is usually the most appropriate policy to cover an interest-only mortgage. For example, if £200,000 of life cover is taken out at the start of the plan the policy will still contain £200,000 of cover right up until the end of the policy term.

This means that if you were to pass away at any point during the policy term the plan would payout a lump-sum amount sufficient enough to repay the loan. The other type of mortgage life cover is decreasing term insurance where the level of cover declines over time, which is usually used to cover a repayment mortgage.

Obtaining joint life cover

With level term life cover it is possible to take out a joint life plan with your partner if you have a joint mortgage. It is also possible to take out life insurance with critical illness cover to protect against the mortgage risk of suffering a serious illness or injury.

For more information please see the page: Level Term Mortgage Life Insurance

level term mortgage life insurance
 
joint mortgage 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 need life insurance for my mortgage but wasn’t sure what decreasing term life insurance means?...
 
I’m thinking of getting covered but I’m not sure if mortgage protection is worthwhile or not. What...
 
I took out mortgage insurance with my bank alongside my mortgage but wanted to review this cover as I’ve...
 
I am looking at taking out life insurance to protect my mortgage and wanted to know what mortgage term...
Need Help? Live chat now and get an instant answer from our Experts...

Neil
Pensions

Victoria
Insurance
Our Latest Reviews
Matthew Draper
11/07/2018

Excellent service at convenient times of the day specified by me. All product options were clearly outlined and I am very pleased.

Paul Devine
10/07/2018

First class service. Helped me through the process from start to finish. Egle and Francis were very professional and talked me though all my options. Once the policies were set up, the after care after was also first class. Highly recommend. 5 stars all day long.

Josip Marjanovich
03/07/2018

Victoria was very helpful about selection of suitable insurance. She always answered all questions in a timely manner.

We are rated 4.9/5 based on 1512 independent client reviews.
To read more of our independent client reviews click here →
REVIEWS
EXCELLENT
4.93 / 5 Average
652 Reviews
Verified Buyer
Overall Rating
The whole process was a pleasure. Drewberry we're easy to deal with, polite, knowledgeable and helpful
Verified Buyer
Overall Rating
Very good, clear service would recommend to friends and family
Anon
Overall Rating
Sam Carr provided an efficient and professional service.
Verified Buyer
Overall Rating
Sam Carr provided a professional but enthusiastic service and helped make the whole process very straight forward. Goodness knows I have been through enough application forms recently. My insurance product was never going to be easy to find and I had been rejected on a number of other occasions through others ironically due to well managed common health conditions. I identified Drewberry in a last and disappointing trawl on th web to find someone that actually wanted to take on a difficult case like me. Some brokers wouldn't even consider me. When we applied for my first choice product Sam wasn't at all deterred by the long wait for my GP report or the final rejection that came back from the insurer, sadly I have become used to it. Within a day he had lined up the second choice and to my surprise he had hit the nail on the head and introduced me to the correct insurer and terms for my needs whilst nogotiating an excellent premium. I am extremely satisfied with what Sam has achieved for me and I would have no hesitation in recommending either him or Drewberry to friends, family and and business contacts. In the future, Drewberry will be my first point of contact. Many thanks!
Kym
Overall Rating
Tailored to my need and the staff gave very good service