Life Insurance: Mortgage Protection vs Legacy Cover – What’s the Difference?

When it comes to life insurance, it’s not always clear which type of policy is right for you. One of the most common questions we hear is this: what’s the difference between mortgage protection and legacy life cover?

They might sound similar – but they serve very different purposes. Choosing the right option (or combining both) could make a significant difference to your family’s financial security.

🏡 What Is Mortgage Protection Life Insurance?

Mortgage life cover is designed to pay off your mortgage if you pass away during the term of the policy. It’s often set up as a decreasing term policy, meaning the payout reduces over time in line with your mortgage balance.

It’s not about leaving behind a cash lump sum – it’s about protecting your home. This type of life insurance ensures your loved ones aren’t left with monthly payments they can’t afford.

📍Real-Life Example:

Sarah and Tom took out a £250,000 repayment mortgage. They chose a decreasing term life insurance policy to match it. Ten years in, Tom sadly passed away. The mortgage balance had reduced to £170,000 – and that’s exactly what the policy paid off. Sarah didn’t receive a large cash payout, but she got to keep her home mortgage-free.

💷 What Is Legacy Life Insurance?

Legacy life cover (often referred to as level term life insurance) provides a fixed cash lump sum to your chosen beneficiaries if you pass away during the term.

It’s designed to leave a financial gift, cover funeral expenses, or simply give your family extra support during a difficult time. The key difference? The payout amount stays the same throughout the policy term – it doesn’t decrease like mortgage protection.

📍Real-Life Example:

John, a single father, had already paid off his mortgage. But he wanted to ensure his daughter Ellie was looked after if anything happened to him. He took out a £150,000 legacy life policy. When John passed away at age 52, the full amount was paid to Ellie – helping her through university, covering living costs, and giving her a stable financial foundation.

🤔 Which Life Cover Do You Need?

The right choice depends on what you want your life insurance to achieve:

• Worried about your family losing the home? → Mortgage protection may be the answer.

• Want to leave a lump sum for loved ones? → Legacy cover is a better fit.

• Want to do both? → You can. Many people choose to take out two separate life insurance policies to get full peace of mind.

🧠 Final Thoughts: Review Your Life Cover

Too often, people think they’re covered – but their policy no longer reflects their life. Children, new homes, job changes – your life insurance should keep up.

If you’re unsure whether your cover still suits your situation, a quick review could make all the difference. It costs nothing to check – but it could mean everything to your family.

👋 Let’s Have a Proper Chat

Not sure what life cover you’ve got – or what you actually need? We're here to help. No pressure, no jargon. Just honest advice to help you get the right protection in place.

Book your free life insurance review today.