Do I need life insurance for a mortgage?

Why would you get life insurance with a mortgage?

Buying a home with a mortgage is a big commitment – you're borrowing tens or likely hundreds of thousands of pounds.

If the worst happened to you, could your family afford to pay the mortgage?

Life insurance can make sure your dependants can stay in the property after you die, without it needing to be sold to cover mortgage costs.

Here we explain how it works and how to get the best deal.

• Find out more: best life insurance quotes compared

Please note that the information in this article is for information purposes only and does not constitute advice. Please refer to the particular terms and conditions of an insurer before committing to any financial products.

What life insurance do you need for a mortgage?

Term life insurance can be taken out with the aim of paying off the mortgage if you die before the cover ends. 

The term (length of cover) is set to the same as the mortgage – say, 25 years – and the sum insured should match the amount borrowed. 

There are two types of policy to choose from:

• Decreasing: This best suits people with a repayment mortgage, where you pay off the loan with interest in instalments. With a decreasing policy, the final payout gets less over time so it matches the amount left on the mortgage. This cover is usually the cheapest option.
• Level: If you have an interest-only mortgage - where you just pay the interest on what's borrowed and settle the actual loan amount at the end of the term – then consider taking out level term cover. The lump sum paid out after death stays the same no matter how much time as passed.

The final life insurance lump sum is paid to your estate, not direct to the mortgage company, though it can be left in trust.

• Find out more: best mortgage rates 2026

Life insurance FAQs

What cover should I get for a joint mortgage?

You can buy joint life insurance with someone else, or have two or more separate policies. 

If you have a joint mortgage, both of you should have life insurance, either jointly or separately.

• Find out more: can you have more than one life insurance policy?

What happens if I remortgage or take out a second mortgage?

If you borrow additional money, by remortgaging your existing home, taking a second mortgage or to buy a new home, you'll need to get life insurance to match the new debt. 

This could mean buying additional life insurance or cancelling your old policy and buying a new one.

Never cancel a policy without having secured a replacement first.

Do you need life insurance to get a mortgage?

You do not have to have life insurance in place to get a mortgage. However, it is sensible to have life insurance in place by the time you activate the mortgage. 

Mortgage providers may offer to arrange this for you, but you can buy your life insurance from elsewhere and may get a better deal if you do.

Do you need life insurance once your mortgage is paid?

There are many reasons why you might want to have life insurance after you have cleared your mortgage.

For example, if you started a family later in life, you may have paid off your mortgage but still have young children to think of. 

Some high-net-worth individuals take out life insurance to cover the inheritance tax the family will have to pay on their estate. 

And many people set up their life insurance so it pays out to a trust, which helps with tax and may speed up access to the money if paid out.

How much does it cost?

There is no fixed price for life insurance. Premiums are based on your age, health and lifestyle. Our guide to term cover gives an idea of the monthly premiums you can expect to pay, both for decreasing and level policies.

The older you are, the more expensive life insurance becomes. Any significant pre-existing medical or other health conditions that increase the risk of you dying early will also increase premiums. 

Your lifestyle choices, such as smoking, high alcohol consumption and even dangerous sports or motorcycling, can push up premiums.

You will need to make an honest declaration about all these issues and your GP will be asked to confirm your medical conditions. In unusual circumstances, you may require further medical examinations before a premium can be quoted.

It is possible to get non-medically underwritten life insurance, but this is restricted to lower sums insured and is more expensive.

• Find out more: what types of life insurance works for over 50s?

What are the disadvantages?

Mortgage lenders used to bundle life insurance up with their loan, even adding the cost of the life insurance into the loan. 

These were rarely good value policies. It is always recommended that you at least shop around and consider buying life insurance separately. 

Life insurance policies do not have standard wordings. Some have exclusions, or make claiming harder if you develop a terminal illness. That means it's not just about price, so you need to find the policy that suits your needs.

If, for example, you have a dangerous occupation or rare illness, you may need to use a specialist life insurance broker who can find cover for you at a better price.

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