Does life insurance need to match your mortgage?
Life insurance is not directly tied to your mortgage in the way a secured loan is. Your insurer doesn't know which mortgage it's covering — the policy pays a sum assured to your beneficiaries, who can then use it to clear the mortgage or do anything else with it.
What happens when you remortgage?
When you remortgage, you typically have three options regarding your existing life insurance:
- Keep your existing policy — if your new mortgage is smaller than your existing sum assured, your current policy may still be adequate. Check the remaining term is long enough.
- Extend or increase cover — if your mortgage has grown or the term has extended, you may need to top up your cover with a new additional policy.
- Cancel and replace — take out a new policy that exactly matches the new mortgage. Be aware that your health may have changed since the original policy, potentially affecting new premiums.
What if I port my mortgage?
Porting (moving your mortgage to a new property) doesn't require you to change your life insurance — the policy is personal to you, not the property. However, if your new mortgage balance is higher, you should review your level of cover.
Frequently Asked Questions
No — you are not required to take out new life insurance when remortgaging. However, it's worth reviewing whether your existing cover still matches your needs.
Yes — your policy is not tied to your mortgage and doesn't need to change when you remortgage. Just ensure the sum assured and term still provide adequate protection.