It’s easy to confuse life insurance with mortgage protection, especially since both offer financial support in the event of illness or death. However, understanding the difference is key to making the right choice for your situation.
Mortgage protection insurance is usually linked directly to your mortgage. If you pass away or can’t work due to serious illness or injury, the policy will pay off the outstanding loan balance. While this ensures your home stays in the family, the payout typically goes straight to the lender, not your family.
Life insurance, on the other hand, pays a lump sum to your nominated beneficiaries. This gives them the flexibility to decide how best to use the money — they might pay off the mortgage, invest the funds, or cover other living costs. Life insurance provides more comprehensive protection for your loved ones and can often be more cost-effective in the long run.
A combination of both policies may be ideal for some, but for most people, life insurance offers broader coverage and more control over the future.
