The average mortgage in the UK is over £100,000. This amount is usually paid back after a large amount of time, up to around 25 years. Even with the longest terms, the monthly amount owed on repayments will be in the hundreds, maybe in the thousands of pounds.

Mortgages are secured on your house, meaning that your house will need to be valued. Your mortgage repayments come out of the income of the applicants for the mortgage. These facts mean that if for any reason you can't afford the repayments, the worst case is that you will lose your home. Thus, it is vital that you take out insurance to cover yourself should anything happen in your life which may cause your to be unable to keep up repayments.

Should the person paying the monthly repayments die, there may be no way for the bereaved to keep up the mortgage payments on the house. A potentially disastrous situation that could arise here is that your dependents could lose your home. You need to take out a life insurance policy to cover this situation.

The nature of a repayment mortgage is that you take it out for a certain amount that you repay over a certain term. Should everything go right, after that term is up, you will have paid off your mortgage. As the term progresses, the amount you owe decreases.


A term insurance policy is quite similar, in that you are covered for a certain amount over a certain term, with the difference being that the insurer owes you the money should an event occur. This event would be your death in the case of term insurance.

With a mortgage, should you take out a mortgage of £200,000, you would need £200,000 of cover with your and pay the monthly payments, at the end of a year you may have £195,000 left (with most of your monthly payments going towards interest in the first year). So, at the start of the second year, you would only need £195,000 of cover. After each premium is paid, you would need a decreasing amount of cover, which is why mortgage protection is also called decreasing term insurance.

The sum assured in a mortgage protection policy reduces by an agreed amount, which is usually equal, over the course of the term. The amount will only be paid out should the person whose life is insured die during the course of the term. There is no surrender value and premiums will be lower than for level term insurance, due to the sum assured decreasing.

You should bear in mind that the fixed term means you have no flexibility, and you can't extend the cover.