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Mortgage Life Assurance

Save £100s on your cover

Whether you’ve already got mortgage life cover, or are looking to get a policy; this step-by-step guide will help you slash costs.

If you bought from your mortgage lender you’re probably paying massively over the odds. Ditching and switching could get you the same cover for a fraction of the cost over the life of the policy.

Whether you’ve already got mortgage life cover, or are looking to get a policy, this step-by-step guide will help you slash costs.

If you bought from your mortgage lender you’re probably paying over the odds. Ditching and switching could get you the same cover for a fraction of the price.

What is mortgage life assurance?

Mortgage life assurance - also referred to as mortgage protection - is a type of life insurance that pays out if you die before you finish paying your mortgage, ensuring that your spouse and dependants don’t need to worry about the monthly repayments. There are two main types of mortgage life assurance; decreasing term, which pays out what's left to pay on your mortgage, and level term, which pays out a set lump sum.

Quick questions

What is the difference between decreasing term and level term life assurance?

What is the difference between mortgage life assurance and mortgage PPI?

What is the difference between assurance and insurance?

Should I buy mortgage life assurance?

Deciding to buy depends on whether you want your mortgage paid off when you die. If your partner could cope with the full mortgage without you, you may not need cover but if you want someone to take full ownership of the property if you die early, it is worth considering. Lenders strongly recommend mortgage life assurance but beware buying directly from your lender as its cover is unlikely to be competitively priced.

Quick questions

What would happen if I don’t take out mortgage life assurance?

Do I need cover if I am single and childless?

Mortgage life assurance: The five need-to-knows

Know all the basics of mortgage life assurance? Here are the five need to knows to making the right purchase

  1. The less risk you'll die, the cheaper

    The younger and healthier you are the cheaper it'll be. The fact pricing radically changes depending on who you are leads to an important rule... Disclose everything; all past conditions and any risks. If not your insurer can use 'non-disclosure' as an excuse not to pay out.

  2. Protect your money by writing in trust

    Writing the policy in trust means you designate who you want the money to go to and it is paid directly to them, ringfencing it from your estate. This means the money cannot be claimed by your creditors; it wouldn’t be liable for inheritance tax as it never became part of your estate and it will be paid quickly as it isn't part of a will.

    How do I put my life cover in trust?

  3. Going it alone is better than buying as a couple

    When you buy mortgage life assurance, you have the choice of buying a single or a joint couples policy.

    What is the difference between a single and a joint policy?

    Does my partner need to use it pay off the mortgage?

  4. Quitting cigarettes lowers your premium

    Non-smokers pay a lot less than smokers, simply because they're a less likely to die during the policy term.

    I've stopped smoking last month, am I classified as a non-smoker?

  5. Switch at your peril

    If you have an existing policy, this guide should enable you to cut the cost if you switch. However, if you've had the policy for many years or have experienced health problems, the savings from buying a cheaper policy may be cancelled out by the fact your risk level has increased.

    I think I can save by switching, how do I do it?

How do I buy mortgage life assurance?

There are four main routes to buying a mortgage life assurance policy: using a comparison site, going directly to an insurer, using a discount broker or using a commission-based broker. You will also be faced with the choice of guaranteed or reviewable premiums. Each of these terms is explained below.

What is the difference between a discount broker and a commission-based broker?

What is the best route to take?

What is the difference between guaranteed and reviewable premiums?

Mortgage life assurance: Best buys

Read the basics and mortgage life assurance need-to-knows? If you are sure the product is for you it is time to buy. The sections below outline some of the cheapest brokers and direct insurers in the market.

Step 1: Benchmark using comparison sites

Buying via comparison sites may not be the cheapest option, as it is with car and home insurance, but it is a good place to gauge the rough price of the cover you will need and which provider might be best suited for you. Theidol.com, Compare the Market and Money Supermarket are good starting points.

Step 2: Check the rates of discount brokers and direct players

If you know what product you want check the rates of the discount brokers too to see if you can make a saving. Discount brokers will charge a one-off fee for their services but it doesn't mean you can't make a saving over the life of a policy.

Step 3: Consider advice for complicated circumstances

If you need advice for your purchase, consider using a commission-based broker. A commisson-based broker gets paid from the commission of the insurer - so it is possible they won't charge a fee - but they will offer advice on the policies they sell.

Step 4: Check your policy

Always double-check the policy terms. Once you've found the best quote check whether it's suitable. If you're a smoker have you submitted it? You don't want to risk a potential claim being turned down.