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 Investment Bonds

Investment bonds are a type of investment that could be used as an alternative to life insurance.In fact, an investment bond is more similar to an ISA than life insurance, in that it's paid for with a single lump‑sum deposit at the outset, rather than monthly premiums. They’re sometimes known as single-premium life insurance policies. 

Group Life Insurance for Employees

Running a successful business isn't just about crunching numbers, increasing profit margins, and creating growth charts. It's also about taking care of your people — the unsung heroes behind all your business victories. After all, your team is your company’s heartbeat; without them, even your best-laid business plans could fall short of success.Part of looking after your team comes down to the benefits you offer. One benefit that's been gaining attention in recent years is group life insurance. But what exactly does group life insurance offer your employees and why could it be a good idea to make it one of your company’s benefits? This blog explores exactly what group life insurance is, how it works and some of the reasons business owners are investing in it.

Does Life Insurance Pay out for Suicide?

Talking about suicide can be difficult, but it’s an important topic to discuss with your life insurance provider. While most life insurance policies will pay out for deaths caused by suicide, there may be certain conditions and exemptions in place depending on your individual circumstances and the type of policy you choose.In this guide, we’ll cover some of the common terms and conditions surrounding suicide in life insurance policies, as well as explore the impact that a pre-existing mental illness may have on your life insurance premiums.