Life Insurance Calculator
Find out if you need life insurance with your mortgage and how much coverage makes sense.
Do you need life insurance with your mortgage?
Life insurance linked to a mortgage ensures that your home loan is paid off if you pass away during the mortgage term. For many homeowners, particularly those with dependents, this is a critical safety net. Without it, your surviving partner or family may be unable to keep up with mortgage payments and could face the loss of their home during an already devastating time.
Whether life insurance is mandatory depends on your country and lender. In some European countries, lenders require life insurance as a condition of the mortgage. Even where it is optional, having coverage makes financial sense if anyone depends on your income. The cost of a policy is typically modest compared to the security it provides: a 35-year-old non-smoker can expect to pay between 15 and 40 euros per month for a decreasing term policy covering a 250,000 euro mortgage.
Decreasing term life insurance is the most popular choice for mortgage holders because the payout decreases in line with your outstanding mortgage balance. Since you owe less each year as you repay your mortgage, the cover you need also reduces. This makes it significantly cheaper than level term insurance, where the payout remains constant throughout the policy term. Level term may be preferable if you want to leave additional funds for your family beyond just clearing the mortgage.
Your age, health, smoking status, and the coverage amount all affect the premium. Younger, healthier applicants pay substantially less. Most insurers require a medical questionnaire, and some may ask for a medical examination for larger coverage amounts. Pre-existing conditions do not necessarily prevent you from getting cover, but they may increase the premium or lead to exclusions.
When comparing policies, look beyond the monthly premium. Check the exclusion clauses, the claims process, and whether the policy includes critical illness cover. Some policies bundle life insurance with income protection or critical illness cover, which can be more cost-effective than buying separate policies.