Mortgage protection insurance ensures your mortgage payments are covered if you lose your income due to illness, injury, or death.
Types of Mortgage Protection
| Type | What It Covers | Payout |
|---|
| Mortgage life insurance (decreasing term) | Death during the term | Lump sum decreasing with mortgage |
| Accident, sickness, and unemployment (ASU) | Unable to work | Monthly payments for 12-24 months |
| Income protection | Illness or injury | Monthly until recovery or term end |
Mortgage Life Insurance
| Feature | Details |
|---|
| Type | Decreasing term life insurance |
| Payout | Reduces as your mortgage balance reduces |
| Cost | Low (£5-15 per month) |
| Trigger | Death |
| Best for | Ensuring mortgage is paid off if you die |
The payout matches your outstanding mortgage — if you die, the mortgage is cleared.
Accident, Sickness, and Unemployment Cover (ASU)
| Feature | Details |
|---|
| Payout | Monthly mortgage payments |
| Deferred period | 30-90 days |
| Maximum payout period | 12-24 months |
| Trigger | Redundancy, accident, or illness |
| Cost | Moderate (£15-30 per month) |
ASU covers short-term interruptions. It’s not designed for long-term illness.
Income Protection for Mortgage
| Feature | Details |
|---|
| Payout | Monthly (typically 50-70% of income) |
| Deferred period | 1-12 months |
| Maximum payout period | Until retirement or fixed term |
| Trigger | Any illness or injury preventing work |
| Cost | Low to moderate |
| Best for | Long-term protection |
Income protection is more comprehensive than ASU but costs more.
Key Differences
| Factor | Mortgage Life | ASU | Income Protection |
|---|
| Covers death | Yes | No | No |
| Covers illness | No | Yes | Yes |
| Covers redundancy | No | Yes | No |
| Duration of cover | Until mortgage ends | 12-24 months | Long-term |
| Payment use | Must pay mortgage | Must pay mortgage | Any purpose |
Do You Need It?
| Situation | Recommended Cover |
|---|
| Mortgage with dependent | Mortgage life insurance |
| No savings, no sick pay | ASU or income protection |
| 6+ months emergency fund | None needed for ASU |
| Generous sick pay from employer | None needed for short-term |
| Self-employed with mortgage | Income protection essential |
Cost Comparison
| Cover Type | Monthly Cost (Example) |
|---|
| Mortgage life (£150K decreasing) | £8-12 |
| ASU (£1,000/month for 12 months) | £20-35 |
| Income protection (£1,500/month to 68) | £20-40 |
Bottom Line
Mortgage protection insurance ensures your home is secure if you lose income. Mortgage life insurance is essential if you have dependents. ASU covers short-term gaps (especially for self-employed). Income protection provides the most comprehensive cover. If you have 6+ months of emergency savings, you may not need ASU. Review your cover as your mortgage balance decreases.
This content is for educational purposes only. Not financial advice. Do your own research before investing.