Keep the home
whatever happens.

What is mortgage protection?

Mortgage protection is not a special product; it is ordinary term life insurance arranged so the sum assured and the term line up with your mortgage. Take a twenty-five year repayment mortgage of £250,000 and the natural arrangement is twenty-five years of cover starting at £250,000.

The purpose is narrow and useful: it removes the single largest debt most households carry, at the moment they are least able to service it. It is not a substitute for cover that replaces your income, which is a separate and usually larger need.

Decreasing vs level term cover

Decreasing term cover reduces roughly in line with the outstanding balance of a repayment mortgage. As you pay the mortgage down, the cover falls to match. It is the cheaper option, and for a standard repayment mortgage it is usually the right one.

Level term cover stays at the same amount for the whole term. It is what you need for an interest-only mortgage, where the balance never reduces, and it is what people choose when they want to leave something over and above clearing the debt.

A common mistake is buying decreasing cover against an interest-only mortgage. The cover shrinks; the debt does not. Check which type of mortgage you actually have before choosing.

Joint or single policies

A joint life first-death policy covers two people and pays once, on the first death. It is usually cheaper than two single policies and is what many couples are sold.

Two single policies cost more but pay twice, if both partners die within the term, two claims are made rather than one. They also stay intact if the relationship ends, each partner keeping their own cover, whereas a joint policy has to be unpicked and rewritten at older ages and higher premiums.

The right answer depends on budget and circumstances. It is worth asking the question explicitly rather than defaulting to joint because it is quoted first.

Adding critical illness cover

You are considerably more likely to suffer a serious illness during a mortgage term than to die during it. Critical illness cover pays a lump sum on diagnosis of a specified condition, which can clear or reduce the mortgage at exactly the point your income may have stopped.

It costs meaningfully more than life cover alone. An alternative worth weighing is income protection, which keeps paying a monthly income for as long as you are unable to work, and so keeps the mortgage payments going rather than clearing the balance outright.

Why you should write it in trust

A policy written in trust pays directly to your named beneficiaries rather than into your estate. That normally keeps it outside the estate for inheritance tax, and it avoids waiting for probate, which matters when there are mortgage payments falling due every month.

Setting up a trust at outset is straightforward and usually free. Doing it later is more awkward. Tax treatment depends on your individual circumstances and may change in the future.

Cover Your Family is not FCA regulated and does not arrange policies. A separate, FCA-regulated adviser compares the market, recommends the right structure and sets up any trust, at no cost to you.