Protection

Mortgage protection vs life insurance: are they the same thing?

People often use these terms interchangeably, but they are not quite the same. Mortgage protection is really a use case for life insurance, sized and structured specifically around your mortgage. Here is how to think about it.

What people mean by mortgage protection

Mortgage protection usually refers to a life insurance policy designed to clear your mortgage if you die. It is most commonly a decreasing term policy, where the amount of cover reduces over time roughly in line with your outstanding mortgage balance. The idea is simple: if you die, the policy pays off what is left on the mortgage, so your family keeps the home.

What standalone life insurance offers

A broader life insurance policy can do more than just clear the mortgage. With level term cover, the payout stays the same throughout the term, so beyond clearing the mortgage there can be money left over to replace income, cover education costs, or provide a financial cushion for your family. It is sized around your family's total needs, not just the mortgage debt.

Decreasing vs level term

Decreasing term cover is typically cheaper because the payout reduces over time, and it suits a repayment mortgage where the balance falls each year. Level term cover costs a little more because the payout stays constant, but it leaves a surplus for the family beyond the mortgage and suits interest-only mortgages or families who want broader protection. Neither is automatically better, it depends on what you are protecting.

The practical takeaway

If your only goal is clearing the mortgage on death, decreasing term mortgage protection is an efficient, affordable choice. If you want to protect your family's wider financial position, level term life insurance does more. Many families use a combination. An adviser works out the right mix and amount based on your mortgage, income, and dependents.

Not sure which is right for you?

That is exactly what we are here for. A quick conversation with an adviser will give you a clear answer based on your situation.

Review my protection Speak to a protection adviser

Major Money Matters Ltd is an appointed representative of Sesame Ltd. Your property may be repossessed if you do not keep up repayments on your mortgage.

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Rated 5.0 out of 5 from 92 Google reviews Read the reviews on Google

    
 
 
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   Paul Maysmith 
 
 
 
 Trustindex verifies that the original source of the review is Google. Always a great experience. Thanks to Mark Potter, Chantel Smith on the mortgage side and Oliver Alan on the insurance. Can't recommend the team highly enough.
  
 
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   Ramona Iuga 
 
 
 
 Trustindex verifies that the original source of the review is Google. 5 stars service,Mark and the team always offer a great service and support all the way,highly recommended.
  
 
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   Kelly Sainty 
 
 
 
 Trustindex verifies that the original source of the review is Google. The second time we’ve used major money matters and cannot fault anything! Both Mark and Chantel as helpful as ever
  
 
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   Amy Phillips 
 
 
 
 Trustindex verifies that the original source of the review is Google. A huge thank you to Billy for all his support throughout my mortgage process. He was knowledgeable, approachable, and always happy to answer my questions, making everything easy to understand and much less stressful. His advice and guidance were invaluable, and I always felt confident I was in good hands. I really appreciate all his help and would highly recommend him to anyone looking for a fantastic mortgage advisor. Thank you, Billy!
  
 
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   Robert Larkey 
 
 
 
 Trustindex verifies that the original source of the review is Google. Top quality service no fuss straightforward advice and actioned quickly once right product decided on
  
 
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   Montell Chukwu 
 
 
 
 Trustindex verifies that the original source of the review is Google. I was recommended major money matters through a friend and they haven’t been short of fantastic, Oliver Potter who handle my mortgage offered a perfect service, can’t recommend them enough!
  
 
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   Billy Camden 
 
 
 
 Trustindex verifies that the original source of the review is Google. The whole team at Major Money Matters are an absolute dream to work with. Their expertise, speed and friendly approach made what we thought was going to be an arduous process quick and simple. Mark, Oli and Lee were always just a phone call away if we had any questions and provided clear and easy to understand advice/guidance. We would recommend their services to anybody.

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