The difference between life insurance and mortgage life insurance
Mortgage life insurance is designed to help your loved ones stay in the family home if you were to die, while life insurance can be used to protect a range of living costs. Let’s explore the differences.
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We all want to ensure our loved ones are financially protected. But that doesn't mean everyone wants protection for the same reasons. As we’ll explore, there are key differences between mortgage protection insurance, life insurance and mortgage life insurance. For the purposes of this article, when we refer to 'mortgage life insurance' we're referring to 'decreasing mortgage life insurance'.
'Mortgage protection insurance’ can refer to different things. For example:
- Mortgage protection insurance is a type of Payment Protection Insurance (PPI). It insures monthly mortgage costs if the policy holder is temporarily unable to work. You can insure against accident, sickness or unemployment, depending on your priorities. The maximum payment period is between 12 and 24 months, but it could end sooner if you return to work. L&G does not offer this type of insurance. Speak to an adviser if you want to find out more.
- Mortgage life insurance. This type of ‘mortgage protection’ is a life insurance policy that’s designed to cover a repayment mortgage. Unlike mortgage protection payment insurance, it pays out upon death rather than illness or injury, and only pays out once. L&G’s Decreasing Life Insurance is a type of mortgage life insurance.
How does mortgage life insurance differ from a standard life insurance policy? Both of these types of life insurance can be used for mortgage protection purposes, but that doesn’t tell the whole story.
What do we mean by life insurance and decreasing life insurance? These are common terms used to describe different types of protection, so let’s take a closer look.
What is life insurance?
Life insurance is a type of cover that can pay out a cash sum if you die during the policy term. With a level life insurance policy, the amount of cover stays the same until the policy ends.
The payout can provide financial security for your loved ones and can be used in whatever way they need it most, such as:
L&G’s Life Insurance policy is an example of this type of insurance.
What is mortgage life insurance?
Mortgage life insurance normally describes a type of life insurance where the amount of cover decreases over the length of the policy. It’s designed to help protect a mortgage that reduces over time, so it’s often used alongside a repayment mortgage. For that reason it’s sometimes referred to as ‘mortgage life insurance’. Our Decreasing Life Insurance policy is an example of this type of cover.
Just remember that life insurance is not a savings or investment product and has no cash value unless a valid claim is made.
Hear more from our life insurance expert, Barry
22 Dec 2025 / 01:34
A fundamental difference between life insurance and mortgage life insurance is what happens to your cover amount during the length of the policy.
With a life insurance policy, your amount of cover will stay the same regardless of when a valid claim is made during the policy term.
In contrast, the potential payout from mortgage life insurance reduces over time. This is roughly in line with the way a repayment mortgage decreases as it's repaid. So while you will have ‘mortgage protection’ it will likely be a lower amount compared to a level term policy, if the original cover amount was the same.
Mortgage life insurance isn’t for everyone. For example, it might not be the right policy if you want financial protection that doesn’t lessen over time. However, taking out mortgage life insurance to protect a repayment mortgage can have its benefits:
- It works for you. The policy can be tailored to your needs. You choose the amount of cover you need to match your mortgage amount and you choose the number of years you need the cover for. It can be taken in joint or single names.
- It’s easy to choose the cover amount. If you're only looking to protect a repayment mortgage, you know the protection you need for peace of mind.
- It’s cheaper. Decreasing mortgage protection is often cheaper than other types of life insurance. We’ll explore the reasons for this next.
If you have a joint mortgage with a partner or spouse, you could consider joint life insurance. This type of protection can help pay off the mortgage if one of you were to die.
However, while joint life insurance can be cheaper than getting two single policies, these policies only pay out once (upon the first death). Some couples choose to get two single policies so that the surviving partner still has cover in place.
Yes, mortgage life insurance is typically cheaper than a life insurance policy. This is because the amount of cover decreases over time, so the potential payout is less than standard life insurance, which is fixed. However, there are many factors that determine life insurance premiums – and whether you can get a policy at all – including your age, overall health, smoker status and alcohol consumption.
Life insurance isn’t just for homeowners. When deciding on what type of life insurance policy you may need, it could help to think about who and what you are trying to protect. If you have children, for example, you may have a wider set of outgoings to protect than just the mortgage. A level term life insurance policy can be a good choice for family and mortgage protection.
However, a ‘decreasing’ life insurance policy for mortgage protection can be an affordable option if you have a repayment mortgage and you’re looking to keep costs down.
Some people have a combination of life insurance and decreasing life insurance. This can work if you want cover for a repayment mortgage and level cover for family protection.
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