Mortgage Life Insurance

Lenders don't like it when their customers pop their clogs

Most lenders will refuse to give you a mortgage unless you also take out mortgage life insurance. They're not just trying to sell you insurance, though: it's to protect the lender. If you don't have life insurance and you die halfway through your loan period, the lender hasn't got its money back.

Mortgage life insurance is an essential condition for most lenders: without it, you almost certainly won't get a mortgage. Although it's often described as a form of insurance for you, in truth mortgage life insurance protects the lender.

Death isn't good for mortgage lenders, because if you die without having repaid your borrowing then getting the rest of its money back can be a difficult and expensive task for the lender. Mortgage life insurance covers that risk and pays off your mortgage if you pop your clogs – which is good news for the lender, and good news for your surviving relatives who won't have to pay your outstanding debt.