Life insurance
A lump sum (or income) for your family if the worst happens. Usually cheaper than people expect, and a sensible starting point for most homeowners.
Life insurance pays out if you die during the policy term. Most homeowners use it to clear the mortgage so the family stays in the home. Some add a level lump sum so loved ones can replace lost income, cover school fees, or simply have breathing room. We advise on protection, comparing a number of insurers on price, underwriting and policy wording, then explain why one comes out ahead for your situation.
Who this is for
- You have a mortgage and people who would struggle financially if you died.
- You are about to take a mortgage and the lender is asking what cover you have.
- Your existing policy is older than your current mortgage balance or family situation.
- You have been declined or rated up elsewhere and need a broker who knows which insurers say yes.
What life insurance actually pays out
If you die during the term, the insurer pays a tax-free lump sum to whoever you have nominated, usually a spouse, partner or trustee. The pay-out goes to your family, not the bank, and they decide what to do with it. Most clear the mortgage with it. Some keep the home and use the cover to clear other debts or fund childcare and living costs.
Decreasing, level, or family income benefit
Decreasing term tracks a repayment mortgage; the sum assured falls in line with the mortgage balance over time. Usually costs less than the other two for the same starting sum assured, and is designed to clear a repayment mortgage and nothing more. Level term keeps the lump sum fixed for the full term; right for interest-only mortgages, family financial protection, or where you want money left over after the mortgage is cleared. Family income benefit pays a regular monthly amount for the rest of the term rather than a lump sum, which is often cheaper and easier for a surviving partner to budget around.
Joint or single policy
A joint life policy covers two people but pays out only once (typically on first death). Two single policies cost a little more but pay out twice if both partners die. For couples with children we usually recommend two singles for that reason. We model both options on the quote.
Writing the policy in trust
A policy written in trust pays out directly to your nominated beneficiaries, usually within days, and the proceeds sit outside your estate for inheritance tax. A policy not in trust gets caught in probate, which can take six months or more, and may be taxed at 40% above the nil-rate band. Setting up trust is free at outset, paperwork takes ten minutes, and we handle it as part of the application.
Guaranteed or reviewable premiums
Guaranteed premiums cost slightly more up-front but the insurer cannot raise them. Reviewable premiums are cheaper at outset and look attractive in years one to five, but the insurer can re-rate them later. For most clients we recommend guaranteed: certainty matters when you are also paying a 25-year mortgage.
Health, lifestyle and disclosure
Insurers ask detailed health and lifestyle questions. Honest, complete answers are the single most important thing. Non-disclosure (intentional or not) is the most common reason claims are refused. Conditions like diabetes, anxiety, asthma, BMI above 30, smoking and family history of cancer all affect price but rarely cause a refusal. Insurer appetites differ wildly. Where one prices up by 50%, another barely loads. Knowing which is the broker's job.
How Major Money Matters helps
Specific things we do for this product. No generic platitudes.
A quote across a number of insurers on day one
We compare a range of options on price, definitions, exclusions and underwriting. Price alone rarely picks the right policy and we tell you why.
Set up the trust at outset
Trust documentation completed alongside the application, free, ten minutes of paperwork. Pay-out goes straight to family, outside probate, outside IHT.
Pre-assess medical conditions
If you have a condition we expect to be loaded or excluded, we approach the right insurer first rather than collect declines.
Review at remortgage and life events
Cover that fitted at first mortgage rarely fits ten years later. We review at remortgage, on a move, on the birth of a child, and adjust the level.
Frequently asked questions
Do I have to take life cover from my mortgage lender?
No. Lenders often quote you an in-house policy, sometimes through a tied insurer, but you are free to consider other options. We compare a range of insurers and explain the differences in cost, cover and underwriting so you can make an informed decision.
How much cover do I need?
A minimum of the outstanding mortgage balance, on a term that matches the mortgage. Most families add a level top-up of one to two years of household income on top, so the surviving partner has runway.
Can I get cover with a pre-existing condition?
Usually yes. Insurer attitudes to diabetes, mental health, BMI, blood pressure, fertility treatments and family history of cancer differ enormously. We pick the insurer to fit your profile.
How much does life insurance cost?
As an illustration only, a 35-year-old non-smoker in good health might pay in the region of £8 to £15 a month for £200,000 of decreasing-term cover over 25 years. This is not a quotation. Costs scale with age, sum assured, term length, smoking status and health, and the premium you are offered depends on your own circumstances and medical underwriting.
What is the difference between life insurance and mortgage protection?
"Mortgage protection" is the umbrella term for the package that protects a mortgage: life cover, critical illness, income protection, or a mix. Life insurance is the death-only piece of that package.
What happens if I do not make a claim?
Term life insurance pays out only if you die during the term. If you outlive the policy nothing is paid, like home or car insurance. Whole-of-life policies have no end date, so cover continues for as long as premiums are paid, and they cost considerably more. They are used mainly for inheritance planning.
Related
Other protection products that often pair with this one.
Critical illness cover
A tax-free lump sum on diagnosis of a serious illness. Wording varies wildly between insurers; comparing price alone misses the point.
Read moreIncome protection
A monthly income, tax-free, if illness or injury stops you working. Replaces 50 to 70% of salary. The most overlooked piece of protection.
Read moreMortgage protection
The umbrella for cover that protects the mortgage: life, critical illness, income protection, or a mix. We size the package to your household.
Read moreWhat our clients say
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Compare life cover with a real adviser
A quick 15-minute call with Ollie Allen or one of the Major Money Matters protection team. We will tell you how much cover you need and what it should cost. No pressure, no panel of three insurers.
We aim to return your call as quickly as we can. Mon to Fri 9am to 5pm, weekend appointments on request.