10/12/2025
If you’re considering taking out a mortgage and you don't already have a life insurance policy, you may be considering if you need cover and how they can work together.
We’re exploring the benefits of life insurance and how it can be particularly important to you if you do have a mortgage, answering common questions busting myths.
What is life insurance?
Life insurance is a policy where the policyholder agrees to pay regular premiums, and the insurer agrees to pay a predetermined lump sum, or ongoing payments, to the chosen beneficiaries in the event of the policyholder’s death.
The amount they receive depends on the level of cover you decide on and can be used to cover specific things, like a mortgage.
In the UK, 35% of adults have life insurance and 50,499 new life insurance claims were paid out in 2024. So life insurance can be a great way to protect you and your family.
Not only can it cover mortgages, it can also be used to cover rent, university fees or simply to offer peace of mind that your loved ones would be financially covered if anything happened to you.
Anyone who has individuals who rely on them financially can benefit from a life insurance policy.
What are the benefits of life insurance?
There can be many benefits of having a life insurance policy. Some key benefits include:
- Peace of mind that should anything happen to you, your loved ones would be taken care of financially
- Financial security for your family and/or loved ones
- Comprehensive cover for all stages of life
- Debt and mortgage protection
- It can be affordable, you can choose your payments and level of cover to suit your needs. Nine in 10 people overestimate the cost of life insurance.
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Do you need life insurance to get a mortgage?
Life insurance isn't a legal requirement for a mortgage, but some lenders do make it a condition of the loan, especially for riskier borrowers or large amounts, to ensure the mortgage gets repaid if you die, protecting their investment and your family's financial stability. While buildings insurance is mandatory, lenders often strongly recommend or require life insurance to cover the debt and provide peace of mind. If you have dependents or a partner who relies on your income, life insurance can help you to ensure that your mortgage could be paid off if anything happened to you. This can be a huge reassurance, knowing that your family would be secure and not lose their home in that instance.
Some lenders may suggest or encourage life insurance as part of responsible borrowing, but they generally cannot make you to take it out. The decision is ultimately yours, based on your financial situation and family needs.
Does life insurance help you to get a mortgage?
Life insurance doesn't typically help you to get a mortgage. However, it can help in making you look more financially responsible.
When getting a mortgage approved, lenders will look at things like: income, credit history, and affordability as well as a life insurance policy.
It can be a good consideration for reassurance that your mortgage would be covered if anything did happen to you.
What life insurance option best suits those with mortgages?
There are two main types of life insurance, whole of life and term life insurance. Whilst whole of life insurance focuses on covering you for your whole life and does not expire, term life insurance allows you to pick a set amount of time you want to be covered for, for example, 10, 20 or 30 years.
Within term life insurance you have something called decreasing life insurance. This policy works well to protect a repayment mortgage. As the value of the mortgage debt decreases, so do the premiums and the level of cover.
If allowing your loved ones to continue to live in the house and not have to worry about paying off the mortgage are your main concern, this is worth considering as the monthly premiums are subsequently less than a level policy.
What are the benefits of life insurance if you have a mortgage?
Life insurance can be a smart financial protection. if you have a mortgage. Some of the main benefits include:
1. Protecting Your Family’s Home
If you pass away before the mortgage is paid off, life insurance can cover the remaining balance. This ensures your loved ones won’t face the risk of losing the home due to unpaid debt.
2. Preventing Financial Strain
Your family won’t have to use savings or sell assets to pay off the mortgage. The payout can settle the outstanding debt.
3. Peace of mindYou know your dependents will have a secure place to live without worrying about monthly payments.
4. Flexible coverage
You can choose a term life policy that matches your mortgage term or a decreasing term policy, where the payout reduces as your mortgage balance decreases, often cheaper than level-term.
With many options available, different levels of cover and different insurers, it can be hard to know where to start. Starting your journey with a life insurance intermediary, like Usay Compare, can simplify the process for you.
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Our team of expert advisers will be able to offer a free, no obligation consultation. They’ll learn about your needs, requirements and budget and help to find a policy that best suits you at the best price possible.
They’ll also be able to help you understand the full ins and outs of your policy, so you're confident in knowing exactly what you're covered for.
Whenever you’re ready to find your policy, our advisers will be ready to support you. You can fill out a quote and await a call from our team or get started now and give us a call on: 01285 864670
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