Life insurance for home loans and mortgages
Key takeaways
- Life insurance is separate from a home loan, but taking on a mortgage can be a useful time to review your financial commitments and whether your existing cover still suits your circumstances
- Life insurance and lenders mortgage insurance (LMI) serve different purposes, so it’s important to understand what each type of insurance is designed to cover
- When considering life insurance, it can help to look at your overall financial position, including your mortgage, other debts, household expenses, dependants, income, assets and any cover you already have
- Your life insurance needs can change over time, so buying a home, refinancing, a change in household income or substantially paying down your mortgage may be good opportunities to review your cover
- Eligibility, available cover and policy conditions vary between insurers and products, so check the relevant policy information and consider your individual circumstances when you apply
Buying a home can bring new financial commitments, including regular mortgage repayments. Taking on a mortgage may be a useful time to consider your financial commitments and review any life insurance you already have.
Life insurance can provide a benefit if you pass away or are diagnosed with a terminal illness. How much cover someone chooses to apply for can depend on their individual circumstances, including their debts, household expenses, income, assets, dependants and existing insurance.
In this guide, we’ll look at some of the things you may want to consider about life insurance when you have a mortgage, including when to review your cover, the different types of insurance you may come across and how to prepare when applying for life insurance. You can also explore other Real Life Insurance product options to learn more about the cover available.
When should you consider life insurance if you’re buying a house?
Buying a home can change your financial commitments, particularly when you take on a home loan. This may make it a useful time to consider how your household would manage those commitments if your circumstances changed, and whether any life insurance you already have still reflects your needs.
You might consider reviewing your life insurance at different stages of the home-buying process, including before applying for a home loan and after your mortgage has been approved or settled. The amount and type of cover you choose to apply for will depend on your circumstances.
Before applying for a home loan
Life insurance is generally not required to apply for a home loan in Australia. However, a lender may require building insurance for the property being used as security. Life insurance is also different from lenders mortgage insurance (LMI), which is designed to protect the lender if the loan cannot be repaid.
Even if life insurance is not required by your lender, applying for a mortgage can be a useful time to review your cover. You may want to consider:
- the expected size of your mortgage and any other debts
- whether a partner, children or other dependants rely on your income
- any life insurance you already have, including cover held through superannuation
- income and assets that could help your household meet mortgage repayments and ongoing expenses if you died
- how much cover you may want to consider to help repay or service the mortgage and meet ongoing household expenses
Life insurance eligibility is assessed separately from home loan eligibility. Depending on the insurer, factors such as your age, health, medical history, occupation, lifestyle and the type and amount of cover you apply for may affect your eligibility and premium.
Considering cover before settlement may give you an opportunity to have life insurance in place when you take on the mortgage. Once your loan is finalised, you can review your cover again based on the final loan amount and household finances.
Keep reading:
After getting approved for a mortgage
Once your mortgage has been approved or settled, you’ll have a clearer picture of your loan amount, repayments and other household commitments. This can be a useful time to review whether your existing life insurance still reflects your circumstances.
Having a mortgage does not automatically determine the cost of life insurance. However, taking on more debt may affect the amount of cover you decide to apply for, and choosing a higher benefit amount may affect the premium you pay.
It can also be worth reviewing your cover if you refinance, increase or substantially pay down your mortgage, move to a more expensive property, experience changes to household income, have children, separate or divorce, or pay off your home loan.
Reviewing your cover does not necessarily mean changing it. It gives you an opportunity to check whether it still reflects your financial commitments.
Keep reading: How life insurance protects you at every stage in life
Life insurance options for people with home loans
Having a home loan doesn’t mean you need a particular type of insurance. However, taking on a mortgage may be a useful time to review the cover you already have and understand the different insurance options available.
Real Insurance offers several life insurance products, as well as optional covers that can be added to eligible policies. These products have different features, benefit amounts, eligibility requirements and policy terms, so it’s important to check the relevant Product Disclosure Statement (PDS) before making a decision.
- Real Life Insurance: Real Life Insurance provides cover that can continue for life. You can choose a benefit amount from $100,000 up to $2 million, depending on your circumstances
- Real Term Life Insurance: Real Term Life Insurance is a fixed-term life insurance policy that ends after 20 years or when you turn 85, whichever comes first. Insurance is available from $10,000 up to $100,000, and a benefit may be payable if you pass away or are diagnosed with a terminal illness during the cover period
- Serious Illness Insurance: Serious Illness Insurance is an optional cover available with Real Life Insurance. It can provide a lump-sum benefit if you experience one of the serious illnesses defined in the policy, such as certain cancers, heart attack, stroke or heart bypass surgery
- Children’s Insurance: Children’s Insurance is another optional cover that can be added to Real Life Insurance. It can provide a lump-sum benefit if an insured child passes away or experiences certain defined serious illnesses or injuries
- Real Life Cover for SMSF: Real Life Cover for SMSF is a life insurance product designed for people holding cover through a self-managed super fund. It can provide up to $2 million in cover, depending on age, and may pay a benefit if the insured person passes away or is diagnosed with a terminal illness
How can life insurance help when you have a home loan?
Life insurance doesn’t insure the home loan itself. However, if a benefit is payable under the policy, the payout may help with financial commitments such as mortgage repayments, everyday household expenses and other personal debts. How the benefit works, when it is payable and any conditions that apply will depend on the policy terms.
What other insurance cover should you consider if you have a mortgage?
Life insurance is one type of cover you may come across when you have a mortgage. Other types of insurance are designed for different purposes, so understanding those differences can help you explore your options without confusing them with life insurance for a home loan.
Income protection insurance
Income protection insurance is different from life insurance. It is designed to provide financial support if you’re unable to work for a period of time due to illness or injury.
If you have a mortgage, it may be useful to understand how income protection differs from life insurance and what role each type of cover is designed to play.
How to prepare your life insurance application with a mortgage
If you’re considering applying for life insurance while you have a mortgage, having your key financial information ready can help you understand your overall position. The information insurers ask for can vary, so the following is general industry-wide guidance rather than a list of Real Insurance application requirements.
1. Gather your home loan information
Have the key details of your mortgage available, including your outstanding loan balance, remaining loan term and regular repayments. These details provide a clearer picture of your home loan commitments.
2. Gather your income and financial information
Review your current salary or other income, employment status and savings. This can help you understand the income and financial resources available to meet your mortgage and other household expenses.
3. Review your assets and liabilities
Make a list of your assets and liabilities, such as savings, investments, superannuation balances, other loans and outstanding debts. Looking at what you own alongside what you owe can help give you a clearer picture of your overall financial position when considering life insurance.
Keep reading: How much life insurance do I need?
Get the right insurance for you and your home
A mortgage can be one of your biggest financial commitments, which makes buying a home, refinancing or making significant changes to your loan a good opportunity to review your life insurance.
The right type and amount of cover will depend on your individual circumstances, including your mortgage and other debts, household expenses, dependants, income, assets and any insurance you already have. Taking the time to review these factors can help you consider whether your cover still reflects your financial commitments.
Real Insurance offers a range of life insurance options for Australians at different stages of life. You can explore Real Life Insurance to learn more about the cover available, review the relevant policy information and request a quote.
Frequently asked questions
Should you get life insurance if you have a home loan?
Having a home loan does not, by itself, determine whether life insurance is appropriate for you. A mortgage may be one reason to review your financial commitments and existing cover.
Is life insurance needed when applying for a home loan?
Life insurance and a home loan are separate products. Taking out a mortgage can be a useful time to review your financial commitments and any life insurance you already have, but life insurance eligibility and home loan eligibility are considered separately.
If you’re unsure about the insurance requirements attached to a particular home loan, check with your provider.
Can life insurance help with mortgage repayments?
Life insurance may provide a lump-sum benefit when an insured event covered by the policy occurs. For households with a mortgage, that benefit may form part of the financial resources available to manage debts and other expenses.
Exactly when a benefit is payable will depend on the type of cover and the policy terms.
Should first home buyers get life insurance?
Buying your first home can be an opportunity to review your financial commitments and any insurance you already have. Whether you choose to apply for life insurance depends on your circumstances.
Is life insurance the same as lenders mortgage insurance?
No. Life insurance and lenders mortgage insurance (LMI) are different types of insurance and serve different purposes.
Life insurance provides cover for the insured person in specified circumstances under the policy. LMI relates to the home loan and is designed to protect the lender rather than provide life insurance cover for the borrower.
23 Sept 2026