Trustpilot
Show More

Ask an Expert

What’s the difference between life insurance and mortgage protection insurance?

If you have a mortgage, you may have considered what would happen if you can’t make payments. For peace of mind, many people put provisions in place so that if something should happen to them, the debt doesn't fall on the shoulders of their loved ones.

Two of the most popular ways of doing this are life insurance and mortgage protection insurance. However, they are two distinct products offering separate types of cover. So, what exactly is the difference? And which type of policy is better for me?

Life insurance

Life insurance, as it sounds, is a type of policy that pays out when you die. It’s designed to provide for loved ones and can be used to cover a range of situations. This could be funeral expenses, general living costs or debts.

While mortgages naturally fall into this, your standard life insurance isn’t always going to be the best option. Many people instead decide to opt for what is known as decreasing life insurance.

These policies are tied to a certain financial obligation, with premiums and subsequent payouts decreasing over time, in line with the amount of money you owe. This means that you never overpay, but can still rest assured that your debts are taken care of whatever happens to you.

Mortgage protection insurance

Whereas life insurance covers you if you die, mortgage protection insurance is a form of income protection.

When you take out these policies, you will work out with an insurer what percentage of your salary is spent on your mortgage. Then, if you are unable to make payments the insurer steps up to make the payments.

Different policies will cover different situations. Generally, they are split into accident and sickness, unemployment or both. 

Related guides

Life Insurance for Mums & Single Mothers

Being a mum is one of the most rewarding yet financially demanding roles. Whether you are a working mum, stay at home mum, or a single mum, securing financial protection for your children is crucial. Life insurance for mums provides peace of mind, ensuring that your family is taken care of if the worst happens.Many families rely on a single income or a combination of salaries to cover daily expenses, mortgage payments, and childcare costs. If something were to happen to a mum, the financial burden on the remaining parent or guardian could be overwhelming. This is why securing the right life insurance policy is vital to protecting the financial future of your loved ones.

Redundancy Insurance

In an uncertain economic climate, redundancy insurance can provide a vital safety net for individuals facing unexpected job loss. This guide explores redundancy insurance in the UK, outlining its purpose, benefits, and considerations to help you decide if it’s right for you.

Finding Life Insurance When You Have a Disability

As of 2022, 14.6 million people in the UK are disabled, making up 22% of the total population. The prevalence of disability rises with age, with just 21% of working-age adults being disabled vs. 59% of those aged over 80.Despite the fact that disabled people make up a significant portion of the population, they still struggle to access services such as life insurance policies. Often, life insurance premiums will be much higher for a disabled person, or they may struggle to find a suitable life insurance policy in the first place. If you’re in this situation, then you understand just how difficult it can be to find life insurance when you have a disability. In this article, we’ll walk through the facts on getting life insurance for disabled adults, discuss what happens to your life insurance if you become disabled later in life, and go over some different types of insurance policies.