Interest Only Mortgage Protection | Benefits of Level Term Insurance
Date: 24 July 2017 Author: Lewis Cable
Are there any Benefits Using Interest Only Mortgage Protection?

Are there any Benefits Using Interest Only Mortgage Protection?

With interest-only mortgages, you only pay accumulated interest throughout the term of the mortgage, with the originally borrowed amount being repaid in full at the end of the term. Should you die before the mortgage is repaid, this could leave your family struggling to make this payment. Typically consisting of level term life insurance, interest-only mortgage protection insurance ensures your mortgage can be repaid in full in the event of your death.

mortgage protection insurance

How Interest Only Mortgage Protection Works

As only the interest on your mortgage is paid during the term of your mortgage, the level of outstanding debt on the mortgage remains fixed until the end of the term. The cover level of your insurance therefore also needs to remain fixed.

Level term insurance, or interest only mortgage protection, is the most appropriate option, as it provides the same amount of cover from start to finish of the pre-agreed cover term (typically the same as the term of the mortgage, which is usually around 25 years). Like your cover, your premiums will also remain fixed throughout the term.

If, for instance, the interest-only mortgage protection cover you take out is £250,000 at the start of the term, the cover will still be £250,000 at the end of the policy’s term. This, of course, means if the unexpected should happen and you pass away at any given time during the term of the policy, your family will receive a tax-free lump sum sufficiently large to repay the mortgage. Depending on the cover amount you selected, there may even be enough to help cover funeral costs, assist your family in coping with the loss of your income or simply make life a little easier during such a difficult time.

Benefits of Using Interest Only Mortgage Protection

The benefits of interest only mortgage protection, or level term life insurance, are therefore certainty that your cover and premiums will remain throughout the term of the police and the secure knowledge that your family will receive a tax-free lump sum to help them pay off the mortgage and have a little extra to use as they find fit in the event of your death.

Helpful Advice

With years of experience and access to interest-only mortgage protection policies from leading insurers, we can assist you in finding the perfect cover for your circumstances. Learn more about our services and/or book an appointment to assess the cover you need by calling us on 01279 315 013 or please get in touch using our contact form.


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