Protecting your mortgage
Your biggest monthly bill is almost certainly your mortgage. Here's how to make sure it gets paid, by life cover, critical illness cover, or income protection, if something goes wrong.
For most homeowners, the mortgage is the largest single financial commitment you'll ever make. It's also what gets paid first every month, because if it doesn't, you can lose your home. Protecting your mortgage means making sure the monthly payments continue if the income paying them stops.
Three risks to insure against: you die (leaving partner/family with the mortgage), you get a serious illness and can't work (critical illness), or you're too ill/injured to work for months or years (income protection). Each has a different solution, and most homeowners need at least the first two.
Cover options for your mortgage
Life cover (term assurance)
Pays a tax-free lump sum if you die within the policy term. Decreasing term matches a repayment mortgage (cover reduces as you pay down). Level term stays flat, better for interest-only. Typically £10-£30/month for £200k+ cover for a healthy 30-40-year-old.
Critical illness cover
Pays a lump sum if you're diagnosed with cancer, heart attack, stroke, MS, or other specified conditions. Lets you clear the mortgage and focus on recovery. Typically £40-£80/month for £150k cover, much more than life-only because CI is far more common than death during working age.
Income protection
Pays a monthly income (50-65% of salary) if you can't work due to illness or injury, for months or years, until recovery or retirement. Pays ongoing, not a lump sum. £30-£60/month for most healthy 30-40-year-olds. The most important cover for self-employed.
Mortgage Payment Protection Insurance (MPPI)
Short-term alternative. Pays 12-24 months of mortgage payments if you're off work due to illness, injury, or redundancy (ASU, Accident, Sickness, Unemployment). Cheap (£15-£30/month) but limited duration. Not a substitute for proper income protection.
How to layer cover for a typical family
For a couple with a £250k mortgage, two young children, both working:
- Life cover. Separate decreasing term policies (not joint), £250k over 25 years for each partner. Cost: around £10-£15/month each. If either dies, the mortgage is paid off. Separate policies pay twice if both died; joint policies only pay once.
- Critical illness. Add CI to each life policy, £100k,£150k cover. Adds £35-£60/month per person. If either is diagnosed with a specified serious illness, lump sum pays off a chunk of mortgage and lets them focus on getting better.
- Income protection. For whichever partner earns more (or both, ideally). Monthly benefit of 50-65% of salary. If off sick long-term, the mortgage and bills keep getting paid. Adds £35-£60/month per person.
Total cost: £150-£250/month combined for a typical family. Less than many people spend on streaming services or eating out. Protects a £250k+ asset and the family's long-term financial security.
Frequently asked questions
Do I have to buy protection from my mortgage lender?
Absolutely not. Lenders can't make you take their cover. Their in-house policies are often more expensive, with fewer features, than cover sourced by a protection adviser.
Isn't my employer's death-in-service enough?
It's a good start, but death-in-service typically only pays 2-4× salary, often not enough to clear a mortgage. Also: you lose it when you change jobs. Personal life cover is portable and can be structured around your actual mortgage balance.
Do I need cover if I'm single with no dependents?
Life cover: probably not (nobody needs the lump sum). Income protection: YES, you still have to pay the mortgage even if you're ill. Critical illness: worth considering, especially if you have no family to fall back on financially.
What if I change lender or move house?
Your protection policies aren't tied to your lender or property, they stay in force regardless. That's why personal cover is better than lender-sold MPPI.
Can I cancel cover when the mortgage is paid off?
Yes, most policies can be cancelled at any time without penalty. Many people keep some cover anyway for family protection reasons.
Does cover pay out into the mortgage directly?
Payout goes to you (or to a named beneficiary via Trust), not directly to the lender. You then clear the mortgage from it. This means the money is flexible, you might use some for living costs while making a decision.
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