Mortgage protection insurance explained
What is mortgage protection insurance?
Mortgage protection insurance is a form of life insurance designed to pay off your outstanding mortgage (or provide similar financial support) if you die during the policy term. It gives your family the ability to stay in the family home if the primary earner passes away.
Level term vs decreasing term
Decreasing term
The sum assured reduces over time, roughly following the outstanding balance of a repayment mortgage. Because the insurer's potential payout reduces over time, premiums are lower than for level term. It is designed specifically to align with repayment mortgage balances.
Level term
The sum assured stays constant throughout the policy period. Premiums are higher than for decreasing term, but the benefit amount does not fall. Level term may be more appropriate for interest-only mortgages (where the balance does not reduce), or where you want the policy to also cover other financial needs such as family income support or inheritance tax planning.
How much cover do you need?
A starting point is to cover the outstanding mortgage balance plus any other debts, plus a buffer for your family's other needs. Use our mortgage protection calculator, which produces a decreasing term schedule and a side-by-side comparison of level vs decreasing approaches.
Single vs joint policy
A joint policy pays out once — on the first death. Two single-life policies cost somewhat more but mean each partner is fully covered. For couples, two policies are often the better long-term solution. Discuss with a regulated adviser who can model the options for your specific situation.
Understanding your mortgage balance
Knowing your outstanding mortgage balance at different points in the term helps you size decreasing term cover accurately. If you'd like to model your mortgage balance or the impact of overpayments, our sister site has a mortgage calculator and a mortgage overpayment calculator on calculators.finance.
Frequently asked questions
No. No lender in the UK can legally require you to buy mortgage protection insurance as a condition of a mortgage. However, it is often strongly recommended, particularly if you have dependants who would struggle to meet mortgage payments without your income.
Level term cover keeps the sum assured constant throughout the policy — useful for interest-only mortgages, additional family income protection, or IHT planning. Decreasing term cover reduces the sum assured over time, roughly in line with a repayment mortgage balance — typically cheaper.
Joint life policies pay out on the first death during the policy term. Two single life policies are often recommended instead — they are sometimes not much more expensive and mean both partners are fully covered separately.
Some policies include critical illness cover as a combined or add-on benefit. A standalone critical illness policy may offer broader coverage. Check the conditions and definitions carefully before relying on bundled cover.
Related calculators
Life insurance
Mortgage Protection Calculator
Size up how much mortgage protection cover you might need and compare level vs decreasing term.
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Life Insurance Needs Calculator
Estimate how much life cover your family might need based on income, mortgage, and debts.
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Income Protection Calculator
Work out a potential income shortfall if you were unable to work due to illness or injury.
Disclaimer
This is a simplified estimate based on the assumptions shown above. It isn't a quote, and a real insurer may arrive at a different figure. Use it as a starting point, then check the details with your insurer or adviser.