Life insurance could be important if you have a young family or other dependents who would have trouble coping with your mortgage payments if you died. If this is the case, you could consider 'term insurance' which is a form of mortgage protection.

Life insurance will pay off your mortgage if you die before the loan term expires. You might consider 'critical illness cover' which can be added on to your life insurance policy.

Term Insurance

This is a type of life cover that can be taken out with a repayment mortgage. There are several variations of this kind of cover starting with 'Decreasing Term Insurance'. You simply pay the insurance premium to the insurer and this will cover your mortgage in the event that you die before the mortgage term expires. The payout for this type of insurance is linked to your mortgage balance and as this reduces over the course of years so does the value of the insurance payout. At the end of the loan term after you have made the final repayment, the policy is terminated.

Level Term Assurance is a little different. Unlike decreasing assurance, the amount of cover remains at the same level for the life of the term. This means that should your dependents need to make a claim against the policy, the mortgage will be paid off and any money left over will go to them.

For more information, check out the Guide to Life Insurance.