Mortgage protection insurance at its simplest is a form of financial protection or type of life insurance which will pay off your mortgage, should you die during the term.
It is a legal requirement that you have mortgage protection insurance, or sufficient life insurance, in place on drawing down a mortgage for your home, unless your health or age mean that you cannot obtain cover and it will be required by your mortgage lender.
Aspect Life offers friendly and personalised advice about all aspects of choosing mortgage protection, ensuring that you find reliable and affordable mortgage protection insurance when purchasing your home.
Your home is likely to be the single biggest investment you will make, and it is also the place where you and your family will call home, so mortgage protection cover offers peace of mind and financial security that your family home would be covered should you pass away.
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What is mortgage protection insurance?
Mortgage protection is a type of insurance which will pay the remaining balance of your mortgage should you die during the mortgage term, protecting your family against the risk of losing their home.
It is a form of decreasing cover life insurance in that the amount of cover offered by your mortgage protection insurance, the sum assured, decreases in line with your declining mortgage balance over the term of the mortgage. The term of your mortgage protection insurance will usually be the same as that of your mortgage.
What is the difference between mortgage protection insurance and life insurance?
Essentially mortgage protection protects your home where life insurance offers financial protection should you die. Mortgage protection is a form of life insurance where the benefit paid when you die clears your mortgage.
Life insurance pays a lump sum to your family or dependents. If you have an existing life insurance policy in place that offers sufficient cover to clear your mortgage, you may not need mortgage protection.
What does mortgage protection insurance cover?
Generally, mortgage protection insurance offers decreasing cover or reducing term cover which reduces as your mortgage is paid off and, should you die during the term, mortgage protection insurance will repay the remainder of your mortgage. This is usually the cheapest form of life insurance available.
It is also possible to purchase mortgage protection insurance that offers level cover, which will mean that there may be a remaining balance after the mortgage is paid off which goes to your estate.
Joint or dual mortgage protection insurance
You can take out single life mortgage protection insurance to cover the life of one policyholder. If your mortgage is in joint names, however, than you will need to take out mortgage protection insurance to ensure both mortgage holders are covered. You may choose between joint and dual mortgage protection insurance.
Joint life mortgage protection insurance covers the life of two policyholders, with payment being made on the death of the first person.
Dual life mortgage protection insurance covers the life of both policyholders, with a payment being made twice should both policyholders die during the term of the policy.
Convertible mortgage protection insurance
Convertible mortgage protection insurance, also known as a conversion option, or guaranteed insurability, means that you can make changes to your cover such as extending the term of your mortgage protection insurance or increasing the sum insured.
With this type of mortgage protection, you can make these changes to your policy without providing new or additional health information or new medical evidence to your insurer during the term of the mortgage protection insurance policy.
If you choose this option, the premiums you pay may increase to reflect the changes made.
Terminal illness benefit
Some mortgage protection insurance policies include a terminal illness benefit.
This means that the mortgage protection insurance will pay the full amount of life cover if you are diagnosed with a terminal illness with a life expectancy of 12 months or less.
Serious illness cover
Serious illness cover, or critical illness cover offers additional benefits and can be purchased with your mortgage protection insurance policy.
This type of serious illness protection means that your mortgage may be fully or partially cleared should you be diagnosed with a specific serious illness listed in your policy.
Mortgage income protection insurance
Mortgage protection insurance will not offer protection if you are unable to work and meet your monthly mortgage repayments.
Income protection insurance is a type of financial protection which provides a monthly benefit to replace up to 75% of your salary if you are unable to work due to illness, injury, or disability.
Income protection insurance can be expensive but you do not need to insure the full 75% of your salary, you could insure the portion of your salary that will meet your mortgage repayments, should you wish to ensure that your mortgage is paid if you are unable to work.
Who offers mortgage protection insurance?
There are a number of mortgage protection insurance providers in Ireland, alongside the main mortgage lenders.
Insurers who offer mortgage protection insurance include:
Mortgage protection provided by your lender
You will usually be offered mortgage protection insurance by your mortgage lender when taking out your mortgage but you are not obliged to purchase mortgage protection insurance from your lender. It may be better to choose a mortgage protection policy from an insurance company as prices and options can vary.
It is wise to shop around rather than just accept the mortgage protection cover offered by your new mortgage lender as you may pay a higher premium. You may also have difficulties if you later switch mortgage provider.
What are the benefits of mortgage protection insurance?
One of the key benefits of mortgage protection insurance is that it offers peace of mind by knowing that your family or loved ones will not face the financial burden to paying the mortgage should you die unexpectedly. This will mean a secure roof over their heads and less stress and upheaval at a difficult time.
Mortgage protection insurance may also pay off your mortgage if you are diagnosed with a terminal illness, or a serious illness if you choose serous illness cover or critical illness cover.
Joint or dual life mortgage protection insurance will cover the lives of two policy holders, meaning that if either or both you and our spouse pass away, you have valuable financial protection in place and your family will be able to remain in the family home.
How much does mortgage protection insurance cost?
Mortgage protection insurance can be obtained for as little as €10 per month. However, generally the price you pay depends on several factors:
As a general rule, you will pay a higher premium for mortgage protection cover the older you are when you take out the policy. There are also maximum age limits in place which vary by insurer.
If you smoke or vape, or have smoked or vaped in the previous 12 months, you could pay up to twice as much for mortgage protection insurance as a non smoker.
It is important to disclose your smoking status to an insurer as you could invalidate your policy if you do not do so.
The sum assured, or amount of cover, will typically be the same as your mortgage amount. Generally, the higher the sum assured, the higher the premium for mortgage protection.
The term of your mortgage protection policy will usually be the same as your mortgage term. This ensures that there is enough cover in place to repay the mortgage should you die during its term.
The amount of mortgage protection cover decreases over the policy term as the mortgage balance decreases over time, unless you choose level cover.
You will be asked about your health on purchasing a mortgage protection insurance policy and you may be asked to provide medical evidence to your insurer.
Current or previous health issues may impact your mortgage protection premium. Cancer survivors may find it easier to get mortgage protection insurance than in times past due to new codes in the insurance industry.
Joint or dual cover mortgage protection may have a higher cost than single cover.
Dual cover offers a higher level of cover to joint cover and may not come at an extra cost so it is worth shopping around.
If you choose a conversion option or add serious illness cover or critical illness cover to your mortgage protection policy, you will pay a higher premium.
Choosing a straightforward decreasing cover mortgage protection policy will usually cost less than adding optional extras. You will not be able to make changes to this policy over time, however.
If you wish to increase your cover on trading up your home, for example, or extend the term of your policy then you will need to take out a new policy which may cost significantly more when you are older or may have developed health issues.
Speak to us today
Aspect Life can help you to enjoy the benefits of mortgage protection insurance cover and ensure your family home will be paid for should you pass away unexpectedly.
Our experienced insurance experts can assist you to find the right mortgage protection for your mortgage and circumstances.
If you are buying your first home, or require a new mortgage protection policy on switching your mortgage or moving home, we can help you to get quick, hassle-free mortgage protection.
Aspect Life will look at your options and we will find the right cover for you at the most affordable price. We can tailor your cover to include serious illness cover if you wish to protect your family home should you be diagnosed with a serious illness.
We can also carry out a full financial review with one of our qualified advisors and advise you on financial protection, pensions, savings, and investments.
Feel free to call us and we can discuss your needs with you.
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