Protection · Explainer
Do I need life insurance with my mortgage?
The honest answer? It depends. But for most people with a mortgage and dependants, it's one of the most important financial decisions you can make.
Is life insurance a legal requirement?
No — no lender in the UK requires you by law to take out life insurance as a condition of your mortgage. However, many lenders will expect you to have it in place, particularly if you have dependants or a joint mortgage. It is, without question, one of the most sensible financial decisions you can make alongside taking out a mortgage.
Think of it this way: your mortgage is likely the largest financial commitment you'll ever make. Life insurance ensures that if you die before it's repaid, your family isn't left unable to keep the home you bought together.
The types of life insurance available
There are two main types of life insurance used alongside mortgages:
Decreasing term life insurance
Most common for mortgagesThe payout reduces over time, in line with your outstanding mortgage balance. Because the insurer's risk reduces as you pay down your mortgage, premiums are lower than level term. This is the most common type used specifically to cover a repayment mortgage.
Level term life insurance
Good for interest-only or family incomeThe payout stays the same throughout the policy term. This is useful if you have an interest-only mortgage (the balance never reduces), or if you want to leave a lump sum for your family beyond just clearing the mortgage.
Whole of life insurance
Permanent coverThis covers you for your entire life rather than a set term, and is guaranteed to pay out whenever you die. Premiums are higher, and it is more commonly used for estate planning purposes than pure mortgage protection.
How much does it cost?
Life insurance is considerably more affordable than most people expect. A healthy non-smoker in their 30s can typically get £200,000 of decreasing term cover over a 25-year term for around £8–£15 per month.
Factors that affect your premium include:
- Your age at the time of application (younger = cheaper)
- Whether you smoke or have smoked in the past
- Your health history and any pre-existing conditions
- The amount of cover required
- The length of the policy term
- The type of policy (decreasing vs level term)
One of the biggest mistakes people make is delaying. Every year you wait, premiums increase — because you're older and statistically more likely to make a claim. Taking out a policy at 28 rather than 38 could save you thousands over the lifetime of the policy.
Critical illness cover — do you need this too?
Life insurance pays out when you die. Critical illness cover pays out if you are diagnosed with a serious illness (such as cancer, a heart attack, or a stroke) and survive.
Statistically, you are more likely to suffer a serious illness during your working life than to die before your mortgage is repaid. For this reason, many advisers recommend combining life insurance with critical illness cover, or considering it as an alternative.
What conditions are typically covered?
Conditions covered vary by insurer. We compare policies across the full market.
Income protection — protecting your monthly payments
Income protection insurance pays a monthly income if you are unable to work due to illness or injury. Unlike critical illness cover (which pays a lump sum), income protection replaces a portion of your salary — typically up to 60–70% — until you recover or reach retirement age.
This is arguably the most overlooked form of protection. If you couldn't work for six months, could you still pay your mortgage? Many people couldn't — yet statutory sick pay is only £116.75 per week (2025 rates).
Joint vs. individual policies
For couples, you can either take out a joint life policy (one policy covering both of you, pays out once on the first death) or two individual policies (each covers one person, pays out independently).
Individual policies are generally recommended despite the slightly higher cost. With a joint policy, coverage ends after the first payout — leaving the survivor uninsured at a time when they're most vulnerable. Individual policies mean both parties remain protected regardless.
Frequently asked questions
Can I use my employer's death in service benefit instead?
Death in service is a valuable benefit, but it typically only pays out 2–4x your salary and is linked to your employment. If you change jobs, you lose the cover. It rarely covers the full outstanding mortgage balance, and it doesn't protect you against critical illness.
What if I have a pre-existing medical condition?
You can still get cover — it may come with an exclusion for the specific condition, or be offered at a higher premium. We work with insurers who specialise in non-standard applications and will find you the best available terms.
Should I write my policy in trust?
Yes, in most cases. Writing a life insurance policy in trust means the payout goes directly to your chosen beneficiaries without going through probate. This means faster payment (within days rather than months) and the payout sits outside your estate for inheritance tax purposes.
Can I take out cover after my mortgage starts?
Absolutely. While it's ideal to arrange cover at the same time as your mortgage, you can put it in place at any point. The sooner the better, though — premiums only increase with age.
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