Do you need life insurance for a mortgage?

Getting a mortgage is a big step in life. It’s one of the most significant purchases you’re ever likely to make, but it can be difficult to know exactly what’s involved.

While you don’t need to get life insurance for a mortgage, it could provide financial protection for your loved ones if you were to pass away unexpectedly. For example, a payout could be used to help with future mortgage repayments.

  • Legally, you don’t need life insurance for a mortgage. Taking out life insurance can still depend on your personal circumstances and how you want to support your loved ones. Below are some areas where you might need, or want to consider, getting life insurance.

    You have a partner or children

    If you’re buying a house as a couple, life insurance could provide peace of mind that the mortgage will be covered should anything happen to either of you.

    If the surviving partner would be able to repay the mortgage alone, you may not need life insurance.

    However, if your partner or dependents might struggle to afford mortgage repayments on their own, they may be forced to sell your home.

    Joint life insurance can give you peace of mind that at least your mortgage is covered, giving your loved ones more stability, even without you.

    Find out more about joint life insurance.

    You’re a landlord

    If you own property and rent it out as a landlord, you might also choose to protect your investments with life insurance. Especially if you have mortgages against these properties.
    While mortgage life insurance is not the same as landlord insurance, and it isn’t a requirement to have, it can help protect your investments. For example, your loved ones could use the payout from a valid life insurance claim to continue paying the mortgages of properties you own and rent out.
     

  • While you might not need life insurance for your mortgage agreement, you may still want to consider it to give your loved ones financial support in the future. Some of the different types of policies available are:

    Mortgage life insurance

    Mortgage life insurance, also known as decreasing life insurance, can often cost less than other types. This is because the potential payout decreases over time, just as your balance does on a repayment mortgage.

    Level term life insurance could also be an option for those with an interest-only mortgage. In this case, the amount of cover stays the same over time.

    Life insurance

    A general life insurance policy can be used for many things, not just mortgage repayments. It can be used to clear debts, financial commitments or simply provide a financial cushion for your family.

    Life insurance is available in different forms, including decreasing, level and increasing. Each one can suit different people depending on what they want to cover and how they choose to support their loved ones.

    Explore all types of life insurance.

    Critical illness cover

    Critical illness cover isn’t a life insurance plan but could pay out on diagnosis of a serious illness covered by your policy. A lump sum could help maintain mortgage repayments if you find you’re unable to work after a diagnosis. That way, you and your loved ones can focus on the important things, including your health.

    Be aware that life insurance and critical illness policies have no cash in value at any time. This means if you get to the end of the policy and no claim has been made, it will end, and you'll get no money back. Also, if you don't pay your premiums the policy will end, and you'll get no money back.

    To be eligible for our life insurance, you must be aged between 18 and 59 and a UK resident.

    Our life insurance is provided by Scottish Widows – who are also part of Lloyds Banking Group. As our life insurance experts, they have been helping to protect what matters most for over 200 years.

  • Anyone who is eligible can take out life insurance, you don’t need a mortgage. You may want to take out a joint life insurance policy with your partner or spouse, or you may have dependants who might need financial support in your absence.

    Life insurance is something to consider if you have loved ones you want to provide for if you’re not there.

    Another option is critical illness cover, which you can buy alongside or separate to life insurance. This could provide a lump sum to support you and those around you, for example making changes to your home or lifestyle while you’re managing a critical illness.

    Bear in mind that life insurance premiums can be more affordable the younger and healthier you are.

 
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