If you own a home, one of your biggest financial commitments is your mortgage. Many people look at life insurance or mortgage protection as a way to make sure their family does not lose their home if something happens to them. Life insurance or mortgage protection, which is right for you?
Both life insurance and mortgage protection are designed to give financial security, but they work differently. This guide explains how each works, their advantages, drawbacks, and how to decide which best suits your situation.
What is life insurance?
Life insurance pays out a lump sum if you die during the policy term. This money can be used however your family needs it, such as:
- Paying off a mortgage
- Covering everyday living expenses
- Funding children’s education
- Maintaining your partner’s standard of living
What are the pros of life insurance?
There are so many positives to having a life insurance policy in place:
- The payout is flexible, meaning the money can be used for more than just paying the mortgage.
- Can provide higher levels of protection.
- Policies can include extras like critical illness cover.
What is mortgage protection?
Mortgage protection, also called decreasing term life insurance, is life insurance designed to pay off a repayment mortgage. The payout amount reduces in line with your mortgage balance. If you die during the policy term, the payout can be used to clear the remaining loan, ensuring your family keeps their home.
Pros of mortgage protection
- Usually cheaper than standard life insurance.
- Tailored to your mortgage balance.
- Provides peace of mind that your family will not face losing their home.
Direct comparison
| Feature | Life insurance | Mortgage protection |
| Payout use | Flexible, can cover living costs, debts, education, or mortgage | Flexible, can cover living costs, debts, education, or mortgage |
| Cost | Typically higher | Usually lower |
| Payout type | Fixed lump sum | Decreases with mortgage balance |
| Best for | Families who need wider financial protection | Homeowners who only want to protect the mortgage |
Which is better?
The choice between life insurance or mortgage protection depends on your priorities.
- If your main concern is keeping your home safe for your family, mortgage protection is often the most cost-effective choice.
- If you want to protect your family’s full financial future, including income replacement and ongoing expenses, life insurance offers more flexibility.
Final thoughts
Life insurance or mortgage protection both provide valuable security for homeowners. The best option depends on whether you want to protect just your mortgage or provide broader financial support.
For many families, a combination works best: mortgage protection for the loan, and life insurance for wider needs. Speaking with an IGotCover specialist can help you choose the right cover and secure the best value policy for your circumstances.
Take the step today with a free quote to protect both your home and your family’s future.
