Opt for 'guaranteed premiums' as this means the monthly cost is fixed

When you buy mortgage term cover you will be given two choices of monthly payment (premium) – guaranteed or reviewable. If your premiums are guaranteed, your insurer will never change the price, so you'll know what you'll be paying over the life of the policy. Reviewable premiums, on the other hand, often cost less at first, but your insurer can hike costs later on, meaning a cheap deal can potentially become costly as you age.

Disclose all health conditions and risks when you apply or your insurer may not pay out

It's important you're open and honest with any information you provide, to ensure any policy that's set up for is fit for your needs – and will cover you if the worst were to happen and your dependants needed to make a claim. Likely things you'll need to disclose when getting a quote for a policy include your age, whether you smoke, your occupation and your health history. The insurer then uses this information to determine whether it will cover you and a price. If you're comparing quotes yourself via a discount broker , you'll usually answer a few basic questions to see initial prices, but will then have to disclose much more detailed information if you then go through to the insurer to apply, which could affect the price/the decision to insure you. As each insurer has its own rules on pre-existing medical conditions, if you've a complicated medical history, it's worth getting advice before you buy . This is helpful as brokers tend to know which insurers will cover your condition(s), and at the best rates. If you're over 50, you can get a policy with guaranteed acceptance – but it's much more expensive If you don't want to disclose health issues and are 50 or over, an over-50 policy is an alternative which doesn't require any health questions and there's guaranteed acceptance up to age 80 or 85. Yet to compensate these are much more expensive, you can't claim in the first one or two years and you could get back less than you pay in. For full information and warnings, see our Over-50s' Life Insurance guide.

A joint policy for a couple only pays out when the first person dies – two single policies can be better

Mortgage life insurance policies can either be taken out to cover just you – a single policy – or yourself and your partner – a joint policy. A joint policy is often cheaper, however it only provides one payout, usually on the death of the first policyholder, when the cover then stops. This is usually best suited if your partner is your only dependant and you'd have no one else to leave a second payout to. However, if you had a joint policy and were to later split with your partner, you'd need a new single policy, and this could be more expensive as it would be based on your new age and health. Taking out two single policies is usually more expensive, but here you would get two payouts if you were both to die during each policy term. Equally it covers you personally, so works independently to whether you are still together with your partner or not.

Write your policy 'in trust' and the money can't be claimed by the taxman

If you die with an active mortgage life insurance policy, the payout forms part of your estate, which could mean it's hit with a huge whack of Inheritance Tax . Yet, in many cases it's possible to avoid this by writing the policy in trust, if it's done at the time the policy is taken out. If the policy is written in trust, the insurance pays out directly to your dependants, so it never becomes part of your estate, which avoids inheritance tax and often speeds up the payout. It's relatively easy to do as most insurance policies include the option (and papers) for writing in trust directly at no extra charge. Note that there are different types of trusts and they can be difficult to change or cancel, even if all your beneficiaries agree, so think carefully about who a payout would be going to. If you know what you're doing, you can write the policy in trust yourself. If not, seek advice from a top advisory broker or see our guide on Independent Financial Advisers.

You can ditch and switch to save (eg, if you've quit smoking or remortgaged and owe less) but savings aren't always possible

Life insurance usually gets more expensive with age, so savings aren't always possible. The fact you're older, or if you've had health conditions since you got the policy, can mean new policies are more expensive than the one you have. Yet there's no harm getting a quote, especially if any of the following applies: You took your policy direct from your mortgage lender (and your health is largely unchanged). If you took out a policy via your mortgage lender or without getting multiple quotes first, it's likely you could stand to save from switching policies. Plus, there's no harm in running some new quotes to check. If it shows you can save (make sure the cover is at the same level), all you need to do is set up the new cover. Once it's in force, cancel your existing policy. As MSE Eesha found: "I took out cover 3yrs ago for £23/mth. I then decided to run some new quotes and found the SAME policy with the SAME provider for £9/mth. Over the 15 years that's left I'll save £2,520." You've since quit smoking, or you no longer have a risky job. Non-smokers pay a lot less than smokers, because they're a lot less likely to die during the term. To count as a non-smoker, you need to have been genuinely nicotine-free for at least a year and in some cases up to five years, so always check. Therefore one year after you quit, get a new quote and see if you could save big. But don't be tempted to lie. If you die and it is discovered you had been a smoker, it could invalidate the policy. If you are seriously giving up, it's a good idea to get it noted on your medical records to back up any potential claim. You've remortgaged or changed properties and no longer need as much cover (and your health is largely unchanged). If you took out a policy to cover a £200,000 mortgage but have since moved, paid off a lump sum or remortgaged and you now owe much less than you were expecting, you could find a new policy covering the amount you now owe is cheaper yet still meets your needs (and your new cover will be for a shorter time period, which will help too).

You're protected if your insurer goes bust

Many things can happen during the lifespan of the policy, and while your broker or mortgage insurance company may be doing well now, it could be a different scenario 20 years down the line. Here's how you could be affected: If your insurer went bust. If your provider goes bust, the Financial Services Compensation Scheme (FSCS) will try to find another insurer to take over your policy or issue a substitute one. Equally, if you've ongoing claims, or need to claim before a new insurer is found, the FSCS should ensure you're covered. If your broker went bust. The only payment you're likely to make to a broker will be the fee for arranging the policy, which is often no more than £25. In the unlikely event your broker went bust after you paid it but before your insurance was arranged, the chance of you getting your money for the fee back is slim. The FSCS would be able to help with any premiums lost as a result of a broker going bust, as these payments are ring-fenced, but this is unlikely to extend to broker fees.

Mortgage Life Insurance

Save £100s on your cover

Tony Forchione and Steve Brigden | Edited by Helen Saxon

Updated Quarterly

If you were to die before your mortgage is repaid, your loved ones may have to pick up the repayments, or be forced to sell the property to repay the lender. This guide takes you through what mortgage life insurance is, what to watch out for and how to buy a policy – as you don't need to take it from your mortgage lender.

Who's this guide for? Anyone looking for insurance to pay off their mortgage if they were to die (so the amount it'd pay out reduces over time). If you want life insurance that pays out a fixed lump sum, regardless of your mortgage payments, head to Life Insurance.

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What is mortgage life insurance?

Mortgage life insurance – also referred to as mortgage protection – is a type of insurance that pays out if you die before you finish paying your mortgage.

Its aim is to stop anyone you leave behind from worrying about paying the monthly repayments, or be forced to sell the property to repay the amount still owed.

There are two main types of mortgage cover:

1. Decreasing term – where the payout reduces in line with your mortgage balance

This is the most common, and usually the cheapest, as the amount you're covered for decreases as you pay your mortgage off (though your monthly payments stay the same). This leaves your dependants with enough money to pay the rest of the mortgage.

It's therefore designed for repayment mortgages – the most common type where the amount you borrow is fully repaid at the end of the term.

This guide focuses on these policies, though it's always worth looking at level-term insurance too - if both policies aren't too different in price, level-term could be a better option as it provides more cover.

2. Level term – where the payout is fixed for the length of the policy

These policies tend to be more expensive, as they pay a defined lump sum if you die within a fixed time, for example, £200,000 if you pass within the next 18 years. However this could be better if you want to leave a lump sum for your dependants to cover more than just your mortgage, for example other debts and/or ongoing spending.

Level-term is also likely to be a better bet if you have an interest-only mortgage, as the lump sum would be available to cover the capital rather than just the repayments. See our Level Term Life Insurance guide for full information.

Should I get mortgage life insurance?

If anyone relies on your income to pay the mortgage and would struggle to keep up with payments without you around, a mortgage life insurance policy can be a cheap way to ensure they have a financial lifeline when you're gone.

Though, ultimately, you don't have to have life insurance so you'll need to weigh up whether the monthly cost is worth it for you. To help, here are two key points to consider:

If you don't have dependants, you don't need life insurance.

You may not need to get a mortgage life insurance policy (or indeed any other sort of life insurance) if no one relies on your income to pay the mortgage, eg your partner and/or children. It would mean, however, that whoever inherits your property may need to sell it, unless they're in a position to pay off your mortgage, or get a mortgage on the property themselves.
If you've already got a life insurance policy, it's likely you're already covered.

You may not have 'mortgage insurance', but if you already have a level-term life insurance policy then this'll give your dependents a lump sum if you die. However, they'd want to use the insurance sum to pay off the mortgage, you'll need to ensure the amount you're covered for exceeds the amount you owe, and the policy is in force for as long as your mortgage term.

Mortgage life insurance need-to-knows

If you think mortgage life insurance is right for you, here are our key need-to-knows to understand before opting for a new policy.

1. Opt for 'guaranteed premiums' as this means the monthly cost is fixed

When you buy mortgage term cover you will be given two choices of monthly payment (premium) – guaranteed or reviewable.

If your premiums are guaranteed, your insurer will never change the price, so you'll know what you'll be paying over the life of the policy. Reviewable premiums, on the other hand, often cost less at first, but your insurer can hike costs later on, meaning a cheap deal can potentially become costly as you age.
2. Disclose all health conditions and risks when you apply or your insurer may not pay out

It's important you're open and honest with any information you provide, to ensure any policy that's set up for is fit for your needs – and will cover you if the worst were to happen and your dependants needed to make a claim.

Likely things you'll need to disclose when getting a quote for a policy include your age, whether you smoke, your occupation and your health history. The insurer then uses this information to determine whether it will cover you and a price.

If you're comparing quotes yourself via a discount broker, you'll usually answer a few basic questions to see initial prices, but will then have to disclose much more detailed information if you then go through to the insurer to apply, which could affect the price/the decision to insure you.

As each insurer has its own rules on pre-existing medical conditions, if you've a complicated medical history, it's worth getting advice before you buy. This is helpful as brokers tend to know which insurers will cover your condition(s), and at the best rates.

If you're over 50, you can get a policy with guaranteed acceptance – but it's much more expensive

If you don't want to disclose health issues and are 50 or over, an over-50 policy is an alternative which doesn't require any health questions and there's guaranteed acceptance up to age 80 or 85. Yet to compensate these are much more expensive, you can't claim in the first one or two years and you could get back less than you pay in.

For full information and warnings, see our Over-50s' Life Insurance guide.
3. A joint policy for a couple only pays out when the first person dies – two single policies can be better

Mortgage life insurance policies can either be taken out to cover just you – a single policy – or yourself and your partner – a joint policy.

A joint policy is often cheaper, however it only provides one payout, usually on the death of the first policyholder, when the cover then stops. This is usually best suited if your partner is your only dependant and you'd have no one else to leave a second payout to.

However, if you had a joint policy and were to later split with your partner, you'd need a new single policy, and this could be more expensive as it would be based on your new age and health.

Taking out two single policies is usually more expensive, but here you would get two payouts if you were both to die during each policy term. Equally it covers you personally, so works independently to whether you are still together with your partner or not.
4. Write your policy 'in trust' and the money can't be claimed by the taxman

If you die with an active mortgage life insurance policy, the payout forms part of your estate, which could mean it's hit with a huge whack of Inheritance Tax. Yet, in many cases it's possible to avoid this by writing the policy in trust, if it's done at the time the policy is taken out.

If the policy is written in trust, the insurance pays out directly to your dependants, so it never becomes part of your estate, which avoids inheritance tax and often speeds up the payout.

It's relatively easy to do as most insurance policies include the option (and papers) for writing in trust directly at no extra charge. Note that there are different types of trusts and they can be difficult to change or cancel, even if all your beneficiaries agree, so think carefully about who a payout would be going to.

If you know what you're doing, you can write the policy in trust yourself. If not, seek advice from a top advisory broker or see our guide on Independent Financial Advisers.
5. You can ditch and switch to save (eg, if you've quit smoking or remortgaged and owe less) but savings aren't always possible
Life insurance usually gets more expensive with age, so savings aren't always possible. The fact you're older, or if you've had health conditions since you got the policy, can mean new policies are more expensive than the one you have. Yet there's no harm getting a quote, especially if any of the following applies:

You took your policy direct from your mortgage lender (and your health is largely unchanged). If you took out a policy via your mortgage lender or without getting multiple quotes first, it's likely you could stand to save from switching policies. Plus, there's no harm in running some new quotes to check. If it shows you can save (make sure the cover is at the same level), all you need to do is set up the new cover. Once it's in force, cancel your existing policy.

As MSE Eesha found: "I took out cover 3yrs ago for £23/mth. I then decided to run some new quotes and found the SAME policy with the SAME provider for £9/mth. Over the 15 years that's left I'll save £2,520."

You've since quit smoking, or you no longer have a risky job. Non-smokers pay a lot less than smokers, because they're a lot less likely to die during the term. To count as a non-smoker, you need to have been genuinely nicotine-free for at least a year and in some cases up to five years, so always check.

Therefore one year after you quit, get a new quote and see if you could save big. But don't be tempted to lie. If you die and it is discovered you had been a smoker, it could invalidate the policy. If you are seriously giving up, it's a good idea to get it noted on your medical records to back up any potential claim.

You've remortgaged or changed properties and no longer need as much cover (and your health is largely unchanged). If you took out a policy to cover a £200,000 mortgage but have since moved, paid off a lump sum or remortgaged and you now owe much less than you were expecting, you could find a new policy covering the amount you now owe is cheaper yet still meets your needs (and your new cover will be for a shorter time period, which will help too).
6. You're protected if your insurer goes bust
Many things can happen during the lifespan of the policy, and while your broker or mortgage insurance company may be doing well now, it could be a different scenario 20 years down the line. Here's how you could be affected:

If your insurer went bust. If your provider goes bust, the Financial Services Compensation Scheme (FSCS) will try to find another insurer to take over your policy or issue a substitute one. Equally, if you've ongoing claims, or need to claim before a new insurer is found, the FSCS should ensure you're covered.

If your broker went bust. The only payment you're likely to make to a broker will be the fee for arranging the policy, which is often no more than £25.

In the unlikely event your broker went bust after you paid it but before your insurance was arranged, the chance of you getting your money for the fee back is slim.

The FSCS would be able to help with any premiums lost as a result of a broker going bust, as these payments are ring-fenced, but this is unlikely to extend to broker fees.

How to slash the cost of mortgage insurance quotes

Never blindly go with a policy offered to you by your mortgage provider. These are often heavily inflated and you're under no obligation to take it – mortgage life cover is completely separate from your mortgage agreement and lender.

Instead, you should get quotes from a number of insurers. Yet unlike other insurance such as car or home, the cheapest prices are not on common comparison sites.

When someone buys a life insurance policy, the 'referrer' gets paid a large commission – so buy a policy via a comparison site and it gets a whack of cash (even if you then went and bought direct from the insurer you wouldn't save as insurers just keep the commission themselves).

Yet go via a specialist discount broker and it passes this extra cash to you as a discount (hence the name). There's usually a one-off £25 fee to pay, but as it can save you £1,000s over the life of policy. It's an easy win. You'll pay more if you're looking for advice on the type of policy to get, yet advisory brokers are still often much cheaper than getting quotes yourself on comparison sites or direct.

To show how vastly costs can differ depending on how you buy, we used the same details to run quotes from brokers, comparison sites and direct with banks and insurers. As this shows, savings of around 40% can be made by buying a policy via a discount broker, compared with going direct to an insurer.

Example costs for £200,000 of cover for 25 years

Quote obtained via	MONTHLY (i)	TOTAL	MONTHLY (i)	TOTAL
Quote obtained via	30-year-old non-smoker		45-year-old smoker
Discount broker (no advice)	£4.05	£1,240 (ii)	£25.24	£7,597 (ii)
Advisory broker (with advice)	£5.46	£1,638	£29.21	£8,763
Comparison site	£5.53	£1,659	£33.57	£10,071
Bank (direct)	£7.28	£2,184	£36.31	£10,893
Insurer (direct)	£7.16	£2,148	£41.58	£12,474

(i) Guaranteed prices – ie the premium doesn't go up each year. (ii) Includes a £25 fee.｜Correct as of March 2021.

The cheapest option if you don't need advice – a top discount broker

Having compared 10 discount brokers in the market for a range of quotes, here are our top brokers to try. All are online, charge a one-off £25 fee and pass on commission. However as each has a different deal with the insurers they compare, the amount of discount will vary.

We'd suggest checking at least the top two and add in the third if you've time. Remember if you're not sure what you're doing, consider getting advice.

If you need advice – try the top advisory brokers

The discount brokers above are 'execution only', so they just find you the cheapest policy – without giving advice.

If you're not sure what kind of policy you need, or you have complicated medical conditions or other circumstances, it's worth getting advice on buying cover. Doing this means the advisor will take some commission, so you'll usually pay more than via a discount broker – though it could result in a better fit policy.

The top advisory brokers

As with discount brokers, we'd suggest checking at least the top two and add in the third if you've time.

Alternatively, you can speak to an independent financial adviser (IFA)

IFAs cover life insurance, among other products, and may be able to see where it fits in with your other protection and wider money issues. It's also a good idea if you'd prefer face-to-face advice (most brokers tend to be phone based). IFAs are regulated and must pass exams on more subjects than brokers, though the costs can vary depending on whether you pay fees or commission. For more and how to find an adviser, see the IFA guide.

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How to complain about your insurance provider

The insurance industry doesn't always have the best reputation for customer service. Plus, while a provider may be good for some, it can be hell for others.

Common problems include claims either not being paid out on time or at all, unfair charges, or exclusions being hidden in small print. It's always worth trying to call your provider first, but, if not, then…

Free tool to help you complain

This tool helps you draft and manage your complaint. It's totally free to use, and it's offered by Resolver, a firm we work with to help people get complaints justice.

RESOLVER – FREE COMPLAINTS TOOL*

If the company won't help, Resolver also helps you escalate your complaint to the free Financial Ombudsman Service.

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Coronavirus Universal Credit & Benefits

Coronavirus Self-Employed & Small Limited Company Help

Mortgage Life Insurance

Save £100s on your cover

Top-pick mortgage life insurance deals

What is mortgage life insurance?

Should I get mortgage life insurance?

Mortgage life insurance need-to-knows

1. Opt for 'guaranteed premiums' as this means the monthly cost is fixed

2. Disclose all health conditions and risks when you apply or your insurer may not pay out

3. A joint policy for a couple only pays out when the first person dies – two single policies can be better

4. Write your policy 'in trust' and the money can't be claimed by the taxman

5. You can ditch and switch to save (eg, if you've quit smoking or remortgaged and owe less) but savings aren't always possible

6. You're protected if your insurer goes bust

How to slash the cost of mortgage insurance quotes

Example costs for £200,000 of cover for 25 years

The cheapest option if you don't need advice – a top discount broker

If you need advice – try the top advisory brokers

How to complain about your insurance provider

Free tool to help you complain

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