H5PikoHow the mortgage protection calculator works
For most families, the mortgage is the largest debt and the main reason they need life insurance. This calculator shows your monthly payment, the interest left to pay and the cover needed to clear the loan if you die, so your family can keep the home.
The formula
The monthly payment uses the standard loan formula: balance x r / (1 - (1 + r)^-n), where r is the monthly interest rate (annual rate divided by 1,200) and n is the number of months remaining. Total interest still to pay is the payment multiplied by n, minus the balance. The suggested cover equals your current balance, because that is the amount needed to repay the lender in full.
How to use it
Enter your current balance from your latest statement, your interest rate and the number of years left. Do not enter the original loan amount. The result updates immediately. Try changing the years to see how a shorter loan reduces total interest, which can also lower the amount of cover needed in the future.
Level term versus decreasing term
Level term keeps the same death benefit for the whole policy. Decreasing term, often sold as mortgage protection, falls over time to track the loan. Decreasing cover is usually cheaper but leaves nothing extra if the balance drops faster than expected. A level policy matched to the loan term provides a fixed sum that can also pay for other costs. The tool shows an estimated premium for a level term at age 40 for comparison.
Example
With a $250,000 balance at 6.5 percent and 25 years left, the monthly payment is about $1,688 and the remaining interest is roughly $256,000. A death benefit of $250,000 would let a surviving partner clear the loan and remove the largest monthly bill. Without it, the family would need to continue the payments from one income, or sell the home.
What else to consider
Your payment may also include property taxes and homeowners insurance, which this tool does not show. If you have a second mortgage or home equity line, add it to the balance. Think about whether your partner would want to stay in the home, and whether other cover, such as savings, could contribute.
Mortgage life insurance versus term life
Bank-sold mortgage life insurance usually pays the lender, not your family, and the benefit declines. A regular term policy pays your beneficiaries, who can choose how to use the money. For most people, a standard term policy offers more flexibility, often at a similar or lower price. Compare quotes before you decide.
Frequently asked questions
Level or decreasing cover?
Decreasing matches the falling balance; level also leaves extra for other costs.
Does this include taxes?
No, only principal and interest.
Reviewed by Umer Shabbir, 10+ years in insurance and personal finance.