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HMRC internal manual

Inheritance Tax Manual

Life Policies: definitions: 'mortgage protection policies' and 'mortgage indemnity guarantees'

Mortgage protection policies are policies owned by the deceased which are taken out to pay off the outstanding loan on a property on the deceased’s death. They are designed to protect the beneficiaries/ dependants from having to continue to pay the outstanding loan following the deceased’s death.

They should not be confused with mortgage indemnity guarantees which, although they are paid for by the borrower, are actually owned by the lender. These are designed to protect the lender, for example, if they have lent more than the market value of the property.