What is Mortgage Protection?
Mortgage protection insurance is a life insurance policy that pays off your mortgage if you or your partner die during the term of the mortgage. It runs for the same length of time as your mortgage. So, if you take out a mortgage over 20 years, your mortgage protection insurance must also be in place for 20 years. If you die during the term, your insurance company pays the policy benefit directly to your mortgage lender. Your lender uses the amount needed to pay off the mortgage. If there is any money left over, they will pass it to your estate. You can change insurer during the term of your mortgage if you find better value elsewhere.
Mortgage Protection Exceptions
By law, your lender must guarantee that you have this cover before taking out a mortgage. However, your lender may allow you to take out a mortgage without having mortgage protection insurance if:
- You are buying an investment property
- Over 50 years old
- You cannot get this insurance
- You have a life insurance in place already. If you have an existing life insurance policy you can use it provided it is not already pledged to cover another loan or mortgage and it provides enough cover
This type of insurance does not cover your repayments if you cannot work due to redundancy, sickness or disability. This type of cover can be got from other types of insurance such as income protection, serious illness or payment protection.
Types of Mortgage Protection
Mortgage Protection Frequently Asked Questions
The cost is on an individual basis and is based on the following:
- Amount of cover taken out (normally the mortgage sum affected).
- Term (fixed for same term as the mortgage).
- Smoker / Non-Smoker.
- General state of health.
All plans are available on a Single Life and Joint Life basis. The Single Life basis covers one person. The Joint Life basis covers two people, with the benefit being paid on first to die only. The premium payment shown on your quote is the total you pay
For new mortgages, you need to cover the amount you are borrowing over the term of your mortgage, i.e. if you are borrowing €250,000 over 25 years; then you will need cover for €250,000 over 25 years.
For an existing mortgage, you will need to ensure that you have covered the current outstanding balance on your mortgage for the remaining term of your mortgage. You can get this information from your mortgage provider. They will send you a statement every 12 or 6 months outlining the remaining balance on your mortgage. If you do not have this, just contact your mortgage provider and they will advise the amount outstanding and the remaining term.