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Understanding mortgage protection life insurance

A pivotal role in securing the financial future of your loved ones


MORTGAGE PROTECTION LIFE insurance provides peace of mind for your family by paying off any outstanding mortgage on your home when you die, often referred to as ‘decreasing life cover’. It’s not the nicest thought, but if something were to happen to you, would your family or partner be able to afford the mortgage payments? With mortgage protection life insurance, you can take these worries away.


This insurance plays a pivotal role in securing the financial future of your loved ones by covering mortgage or other long-term loan obligations in the event of your demise during the policy term. The duration of the cover is a critical aspect in determining the extent and period of protection provided.


STRAIGHTFORWARD YET EFFECTIVE The principle behind mortgage protection life insurance is straightforward yet effective. As you gradually pay off your repayment mortgage (also called 'capital and repayment mortgage’), the outstanding amount decreases, which in turn reduces your need for extensive life cover. Consequently, the mortgage protection life insurance cover reduces over time, mirroring the reduced mortgage balance. Premiums are typically fixed, offering consistency in payments throughout the term. The cover reduces to zero alongside the mortgage balance, aiming for both to conclude simultaneously. This unique feature often results in lower premiums compared to other life insurance variants, although it's important to note that failure to maintain premium payments can lead to the termination of the cover without any cash value or payout.


“Opting for decreasing cover aligns the benefit with the reduced loan balance, ideally suited for repayment of mortgages or long-term loans.”

LIFE INSURANCE ALONGSIDE A MORTGAGE Although life insurance isn’t mandated by law alongside a mortgage, certain lenders may require it. Your specific needs and circumstances should inform the choice between different types of life insurance. Understanding what’s covered is crucial when deliberating on mortgage protection.



TYPE OF COVER YOU SELECT Securing a mortgage signifies a significant milestone, offering a moment to evaluate your existing protection measures for your loved ones. Mortgage protection life insurance ensures peace of mind, allowing you to relish life’s moments today, secure in the knowledge that your family will be safeguarded in the future. The type of cover you select will affect your family’s ability to use the claim proceeds to clear the remaining mortgage, address other long term financial obligations or cater to their needs. Opting for decreasing cover aligns the benefit with the reduced loan balance, ideally suited for repayment of mortgages or long-term loans. Conversely, level cover means that your family receive a one off lump sum to use however they like. This amount could not only help them keep the living standards they’re used to but also help pay off an interest-only mortgage.


>> HOW WILL YOU PROTECT YOUR FAMILY'S FUTURE? << If you're contemplating how to protect your family's future, especially in relation to your mortgage obligations, further information can provide clarity and guide your decision-making process. For advice tailored to your unique situation, do not hesitate to make contact Omni Finance – telephone 01424 236903 – email simon.hickman@omnifinance.co.uk


The Mortgage & Property Magazine is published quarterly for Omni Finance by Goldmine Media Limited. All enquiries should be addressed to The Editor, The Mortgage & Property Magazine, c/o Goldmine Media Limited, 124 City Road, London EC1V 2NX. Please note that The Mortgage & Property Magazine does not accept unsolicited contributions. Editorial opinions expressed in this magazine are not necessarily those of Goldmine Media Limited and Omni Finance does not accept responsibility for the advertising content. Offers and promotions may have limited availability. To discover more, visit the Omni Finance website: www.omni-finance.co.uk. All Rights Reserved 2024. The content of the articles featured in this publication is for your general information and use only and is not intended to address your particular requirements. Due to the devolved administrations of the United Kingdom, the information relates to England only except where explicitly referred to otherwise. Articles should not be relied upon in their entirety and shall not be deemed to be, or constitute, advice. Although endeavours have been made to provide accurate and timely information, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. No individual or company should act upon such information without receiving appropriate professional advice after a thorough examination of their particular situation. We cannot accept responsibility for any loss as a result of acts or omissions taken in respect of any articles.


THINK CAREFULLY BEFORE SECURING OTHER DEBTS AGAINST YOUR HOME. YOUR HOME MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON YOUR MORTGAGE. AS WITH ALL INSURANCE POLICIES, CONDITIONS AND EXCLUSIONS MAY APPLY. YOUR BUY-TO-LET PROPERTY MAY BE REPOSSESSED OR A RECEIVER OF RENT APPOINTED IF YOU DO NOT KEEP UP PAYMENTS ON YOUR MORTGAGE. MOST BUY-TO-LET MORTGAGES ARE NOT REGULATED BY THE FINANCIAL CONDUCT AUTHORITY (FCA). EQUITY RELEASE MAY INVOLVE A HOME REVERSION PLAN OR LIFETIME MORTGAGE WHICH IS SECURED AGAINST YOUR PROPERTY. TO UNDERSTAND THE FEATURES AND RISKS ASK FOR A PERSONALISED ILLUSTRATION. EQUITY RELEASE REQUIRES PAYING OFF ANY EXISTING MORTGAGE. ANY MONEY RELEASED, PLUS ACCRUED INTEREST, TO BE REPAID UPON DEATH OR MOVING INTO LONG-TERM CARE. EQUITY RELEASE WILL AFFECT POTENTIAL INHERITANCE AND YOUR ENTITLEMENT TO MEANS-TESTED BENEFITS BOTH NOW AND IN THE FUTURE.

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