Do You Need Life Insurance With Your Mortgage?

Zak Hewes
6 days ago
3 min read

When you’re buying a home, there’s a lot to think about—mortgage rates, deposits, paperwork—but one question that often comes up is: Do you need life insurance with your mortgage? The simple answer is: it's not legally required, but it's highly recommended. Here’s why.

What Is Life Insurance?

Life insurance is a financial product that pays out a lump sum to your loved ones if you pass away during the policy term. The payout can be used to cover various expenses—most importantly, your mortgage.

There are different types of life insurance, including:

Level Term Life Insurance – Pays a fixed amount if you die within the policy term.
Decreasing Term Life Insurance – The payout reduces over time, typically in line with your mortgage balance.
Whole of Life Insurance – Covers you for your entire lifetime (more expensive, less commonly tied to mortgages).

Is Life Insurance Required for a Mortgage?

No, lenders in the UK do not require life insurance to approve your mortgage. However, many lenders and brokers will strongly recommend it to protect both you and your family. Some lenders may insist on having a policy in place if you're taking out a large loan, or if you are using certain schemes.

While it’s not mandatory, having the right life insurance can offer priceless peace of mind.

Why You Should Consider Life Insurance with Your Mortgage

1. Protect Your Family’s Home

If you pass away before your mortgage is paid off, your loved ones could be left with a substantial debt. A life insurance payout can help pay off the mortgage, allowing your family to stay in the home without financial strain.

2. Affordability

Decreasing term life insurance (commonly matched to your mortgage term and amount) is usually affordable—especially if taken out when you're younger and healthy.

3. Peace of Mind

Knowing your family won’t have to worry about the mortgage if the worst happens provides peace of mind—something money can't buy.

4. Flexibility

You can tailor your life insurance policy to suit your mortgage type, length, and your family’s needs. For example, if you're self-employed or the main income provider, life cover becomes even more critical.

What Happens If You Don’t Have It?

If you were to die without life insurance in place, your mortgage would still need to be repaid. Unless another borrower is on the mortgage (such as a partner), your estate would be responsible. If they can't pay, your family could lose the home.

What If You Already Have Life Insurance?

If you already have a life insurance policy, you should review it when taking out a new mortgage to ensure:

The amount covered is sufficient to repay your mortgage.
The term matches your mortgage length.
Your beneficiaries are up to date.

Speak to an Expert

Everyone’s situation is different. Whether you're single, a couple, have children, or are self-employed—your protection needs vary.

At Your Mortgage Manager, we help you find the right life insurance cover alongside your mortgage. We work with a wide range of providers to offer tailored advice, especially if you have health conditions, a high-risk occupation, or a complex financial setup.