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Why cover:
  • 6 of 10 UK mortgage holders have life cover
  • secure your loved ones’ well-being
  • price at all-time low, cover from £5 a month
Why us:
  • helping you find the right policy for you
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Mortgage life insurance FAQ

Can I get mortgage life insurance to cover both me and my spouse?

That will be ideal! The family’s finances will suffer on the death of either spouse, whether that spouse is working or is a stay-at-home spouse. Getting joint life insurance will protect the property from foreclosure due to the death of any one spouse.

Even if you are still living, the death of a spouse will have a significant financial impact on your family’s budget. The mortgage life cover will free up any existing savings to cover end-of-life expenses, which may not only involve funeral and burial expenses, but also hospital bills. You will also have to face your spouse’s hospital bills as well as funeral and burial expenses. Learn more about joint life policies.

Will my smoking habit affect my mortgage life insurance premiums?

Yes. Smoking will negatively affect your mortgage life insurance premiums. Smoking is widely known to have serious health implications and will significantly increase premium on your policy.

I am already required to get private mortgage insurance? Isn’t this enough coverage for my mortgage?

Please note that private mortgage insurance is different from mortgage life insurance. (know more about mortgage life vs. private mortgage insurance )

Private mortgage insurance (PMI) provides coverage only for when you miss out on the payments of your mortgage for whatever reason or when you get the mortgage with just the minimum down payment. PMI is protection for the lender’s investment on your mortgage – this means that even with PMI, you will still lose your home to foreclosure if you miss the payments.

Mortgage life insurance, on the other hand, is insurance that protects you and your family’s interests. It will provide a lump sum payment to cover the balance of your mortgage in the event of your death.

Wouldn’t I be better off with a “regular” life insurance policy rather than a mortgage life insurance policy?

Actually, there are instances where a regular term life insurance policy is wiser, as it provides flexibility in how the proceeds are spent. Your spouse and other beneficiaries can spend the proceeds to not just pay for the mortgage but also for other needs.

However, there may be instances where regular life insurance is harder to obtain, perhaps due to your health condition. Also, if you are not sure as to how your beneficiaries will spend the life insurance proceeds and fear that they may not prioritize the payments on the mortgage, your substantial investment in your home may be at risk. Getting mortgage life insurance ensures that the proceeds of the insurance goes directly to the lender, so that the mortgage is fully paid upon your death. Learn more about mortgage life insurance compared to term life insurance.

Does mortgage life insurance require a medical exam?

Usually, no. Most mortgage life insurance policies don’t require a medical exam. Instead, they will ask health related questions in the application to determine whether you are qualified for the coverage. If you have a pre-existing medical condition, the insurance company may require further information or a medical report from your doctor.

Please make sure that you are honest in your disclosure of your medical information to prevent unpleasant surprises when your beneficiaries need to make a claim. However, you should also note that the insurance company may also consider you too big a risk to cover and may refuse you coverage.

Is mortgage payment protection and mortgage life insurance the same?

No, these two products are not the same but you can get both covers to provide more protection for your mortgage.

Mortgage payment protection insurance provides the monthly mortgage amortizations in the event that you become disabled due to sickness or accident or if you become unemployed.

On the other hand, mortgage life insurance fully pays up the balance of your mortgage upon your death.

Can my mortgage lender charge me a fee if I choose to get my mortgage life insurance from another insurance company?

You have the option to buy mortgage life insurance directly from the lender. Your mortgage lender is prohibited by law to charge you any fees if you opt to get your mortgage life coverage from another source. If you can find a better deal than what the mortgage lender can provide, you should consider if it’s the best option for you.

The advantage is that you get your coverage at a cheaper price and the premiums will not be included in the interest charges pegged on the monthly mortgage amortizations. The disadvantage is that it may be more inconvenient to mind two payments instead of just one.

Are there reasons why my claim may be denied?

If the premium payments are kept current and there are no misrepresentations of key insurance information, there shouldn’t be any problems with regards to the claim.

However, if you allowed the policy to lapse due to non-payment of premiums due or if you committed fraud during the application and claims process, these may lead to problems with your claim. Also, a claim will be denied if the cause of death is a stated exclusion in the policy. This includes death due to self-inflicted injury/suicide, death resulting from criminal or illegal acts and other exclusions stipulated in the policy.

I am already sick, will this prevent me from getting cover?

Referred to in insurance terms as a pre-existing medical condition, it really depends on the insurance company if they will decide to provide you with coverage. However, it is normally easier to get mortgage life insurance coverage as opposed to “regular” life insurance coverage since mortgage life insurance doesn’t require any medical examinations. The pre-existing illness will, more likely, be excluded from the cover. This means that if the cause of death is the excluded pre-existing illness, the insurance company may deny the claim.

What things should I look for when I buy mortgage life insurance?

It is important to check that your coverage matches the amount of debt you have, as well as the length of your mortgage. Then, you should consider what type of mortgage life insurance you want. The usual choices would be a level term mortgage life insurance and a decreasing term mortgage life insurance. This really depends on your needs.

If you are regularly paying your monthly mortgage amortizations, it is best to go with a decreasing term mortgage insurance where coverage is scheduled to decrease as the mortgage debt also decreases.  If you have an interest-only mortgage (where only interest is charged during the life of the loan and the entire principal becomes due at the end of the mortgage term), you will need a level term mortgage life insurance.

Does mortgage life insurance have cash value?

Some policies accumulate cash value over the life of the policy. However, mortgage life insurance is not one of them. Commonly, the type of insurance coverage provided by mortgage life insurance is term life insurance, which does not accumulate any cash values. This means that if you die beyond the coverage period of the policy, this is no longer considered payable. Payouts will only be made if the death occurs within the life of the policy.

If you want to get a refund of your premiums, you can opt for a return of premium rider, which will refund all your premiums at the end of the policy period. However, you will also have to pay additional premiums for this.

Can I cancel my coverage if I change my mind?

You are given what is called a cool-off or free look period. This is counted as a certain number of days after the policy is issued. Within this period, you have the option to cancel the policy and expect a full refund of your premiums. The number of days for the free look period will vary from company to company. You can also cancel the cover at any time within the cover period if you decide to switch mortgage life insurance providers. This, however, is not without its risks.

How long do I have to wait before the coverage takes effect?

Once you have submitted your application, payment and other necessary documents, the insurance company will process your application and issue the policy. Once your policy is issued, the coverage is considered effective.

Some cause of delays will be further medical information required if you have a pre-existing medical condition (i.e. you recently had an operation, you have high blood pressure or diabetes). The insurance company will first request additional information from your doctor.

There are some providers that give free cover from the time that the policy application is submitted up to the time the application has been evaluated and the mortgage life cover is issued.

How soon after I sign the mortgage should I get mortgage life insurance?

We recommend that you already have the mortgage life cover in place by the time the mortgage is signed. However, don’t get the cover earlier than three months in advance. The insurance company may also require some documents from the lender so that the policy cannot be issued without key information about your lender and your mortgage.

If I remortgage, can I have my existing mortgage life insurance apply for the new mortgage?

No, a remortgage will require a new cover. Mortgage life insurance is not transferrable to the new mortgage.

Will my mortgage life insurance also pay if I get disabled?

No, disability insurance is different from mortgage life insurance. Mortgage life insurance pays only upon the death of the insured. However, you can add a mortgage protection insurance to your mortgage life insurance to ensure mortgage amortizations are paid even if you become disabled through accident or sickness. There is also a rider that waives all premium payments in the event that you become disabled.

I expect to need my loan cheque within the next three months but I don't have an exact date yet. What should I do?

If you have not finalised a closing date for your loan and are unsure of the date you would like your Mortgage Protection Insurance policy to start from, then simply inform us 'Start Date To Be Advised' when you are returning your application form. In this way we will process your Mortgage Protection Insurance application but the insurance company will hold off issuing your policy until we receive your instructions giving us a date to proceed. The advantage is that all paperwork is out of the way. Your lender will generally require the Mortgage Protection policy document a week before you need the loan cheque.

Latest update: 09.06.2013

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Also feel free to visit our sister critical illness cover website.