What is the Average Cost of Mortgage Protection Insurance?
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Ian Kennedy QFA
- June 27, 2023
Jump to…
- What is the average cost of Mortgage Protection in Ireland 2023?
- What is the average cost of Mortgage Protection for joint applicants?
- What is the average cost of Mortgage Protection for a single applicant?
- What is the average cost of Mortgage Protection at 30
- What is the average cost of Mortgage Protection at 35
- What is the average cost of Mortgage Protection at 40
- What is the average cost of Mortgage Protection at 45
- What affects the cost of a Mortgage Protection policy?
- Difference between Life Insurance and Mortgage Protection
- What is the average cost of Mortgage Protection in Ireland 2023?
- What is the average cost of Mortgage Protection for joint applicants?
- What is the average cost of Mortgage Protection for a single applicant?
- What is the average cost of Mortgage Protection at 30
- What is the average cost of Mortgage Protection at 35
- What is the average cost of Mortgage Protection at 40
- What is the average cost of Mortgage Protection at 45
- What affects the cost of a Mortgage Protection policy?
- Difference between Life Insurance and Mortgage Protection
What is Mortgage Protection?
Mortgage Protection is a specific form of insurance. It decreases in line with your mortgage and will clear the outstanding balance should a policyholder die within the term.
When you take out a mortgage, it’s mandatory to acquire Mortgage Protection as well.
It’s important to clarify that Mortgage Protection differs from Life Insurance.
Both provide a pay-out in the event of your death, but the way these funds are distributed differs.
In the case of life insurance, the sum assured is directly passed on to your nominated beneficiaries.
Meanwhile, with Mortgage Protection, the sum is initially directed to your bank to clear any outstanding mortgage.
If you’re in the process of applying for a mortgage or awaiting drawdown, it’s time to arrange your Mortgage Protection.
Do I have to have Mortgage Protection in Ireland?
Yes, Mortgage Protection Insurance is generally mandatory in Ireland.
According to the Consumer Credit Act 1995, mortgage lenders are required to ensure that a life insurance policy is in place to cover the outstanding balance on a mortgage in the event of the borrower’s death.
This also applies in the case of a joint mortgage, where protection is needed in the event of the death of one of the borrowers
However, there are notable exceptions to this rule:
1. If the mortgage is for a property that is not the borrower’s principal private residence, life insurance is not required.
2. Mortgage protection is not mandatory if the borrower is over the age of 50 at the time of loan approval.
3. The requirement is also waived if the insurance premium would be excessive due to the borrower’s medical issues.
4. You already have enough life insurance to pay off the home loan if you die
It’s important to consistently evaluate your mortgage protection policy and confirm that it continues to meet your needs. For instance, if you decide to lengthen the duration of your mortgage, you might need to consider obtaining extra coverage to ensure sufficient protection.
Do I need to take out Mortgage Protection with my lender?
No. In fact, we encourage you to compare the market. This will help ensure you get the best cover and the cheapest premium.
Using a broker for Mortgage Protection could have you thousands in the long run.
At emero Insurance, we have a partnership with all the major insurers. This means we can evaluate the market and get you the best price.
We also deal in this area every day meaning we know the intricacies of each provider.
What is the average cost of Mortgage Protection in Ireland 2023?
The average cost of Mortgage Protection in 2023 is €29.55.
This is based on a Dual policy for two healthy, non-smoking applicants aged 38.
Why did we choose age 38?
According to the Central Statistics Office (CSO), the average age of house buyers in Ireland is age 38.
When applying for your Mortgage Protection policy, you’ll have two options:
- Joint/Dual Mortgage Protection – average cost of €29.55
- Single Mortgage Protection – average cost of €20.83
Joint/Dual is for those buying a house as a couple.
Although most people apply as a couple, there are also many who apply independently.
We’ll look at the average cost for both scenarios.
If you’re looking for an estimate, feel free to use our quote engine. Although for the most accurate quote, please contact our team.
What is the average cost of Mortgage Protection for joint applicants?
Now we know the average house buyer is 38 years old, we’ll use this data to find the average cost and run our quotes.
This average Mortgage Protection policy for joint applicants costs €29.55 per month.
The above quote is for €300,000 cover over a 25-year term. We also assumed the couple had no major underlying health issues.
This quote was from Royal London and is a Dual Life Mortgage Protection policy.
Why is the dual part important? Glad you asked.
When taking out Mortgage Protection as a couple, you’ve two options.
Joint Life Mortgage Protection – this policy pays out when the first policyholder dies and will clear the outstanding mortgage.
Dual Life Mortgage Protection – a dual life policy pays out when the first policyholder dies and clears any outstanding mortgage. However, cover continues with the surviving policyholder and will pay out again should they die within the term.
Essentially giving you double the cover for the same price. With a dual policy, the cover will be the same on both lives.
What is the average cost of Mortgage Protection for a single applicant?
We’ll now compare the costs for those applying as a single applicant.
The average cost of Mortgage Protection for a single applicant is €24.69
To keep things uniformed, we’ve used the same criteria as above. A healthy, 38-year-old who does not smoke.
The policy term is 25 years and the sum assured is €300,000.
Comparing Mortgage Protection costs for Single vs Joint applicants
From a cost perspective, applying as a single applicant will mean a cheaper monthly premium.
It’s a simple risk analysis. The insurers are covering one life rather than two.
Exactly how much cheaper will vary depending on the case.
On average, it’ll probably be slightly more than half the price of a Dual Mortgage Protection policy.
Below is an example of a single vs dual policy. We’ve used the same date of birth, sum assured and policy term.
Policy details | Single policy | Dual policy |
€350,000 over 25yrs | €20.83 | €31.77 |
Comparing the average cost of Mortgage Protection for different age groups
When it comes to Mortgage Protection, understanding the factors that influence its cost is crucial.
One such factor is age. As with most insurance policies, as individuals grow older, the average cost tends to increase.
In this section, we will explore the average costs of Mortgage Protection for various age groups.
For simplicity, we’ve assumed a joint application with both applicants being the same age. For consistency, we will consider a sum assured of €300,000 and a term of 25 years.
Policy Overview Details | |
Term | 25 Years |
Sum Assured | €300,000 |
Mortgage Rate | 6% |
What is the average cost of Mortgage Protection at 30?
The average cost for two thirty year-olds applying for Mortgage Protection in Ireland is approximately €19.43 per month.
It’s important to note that this is an average price, and individual circumstances, such as health and lifestyle factors, may influence the final cost.
However, as a starting point, this provides an estimate of the expected expense for Mortgage Protection at this age.
What is the average cost of Mortgage Protection at 35?
As individuals reach the age of 35, the average cost of mortgage protection increases.
The average cost is approximately €23.40. Again, this is for a joint application.
What is the average cost of Mortgage Protection at 40?
For those applying for mortgage protection at the age of 40, the average cost rises further.
The average cost is approximately €35.35 per month.
Remember that individual factors can influence the final price, but this figure serves as a useful benchmark for understanding the average cost of mortgage protection for individuals in their forties.
What is the average cost of Mortgage Protection at 45?
As individuals approach their mid-forties, the average cost of mortgage protection continues to increase.
For a 45-year-old couple, the average monthly cost will be approximately €57.40.
Understanding the average cost of Mortgage Protection at different ages is crucial for those considering purchasing or switching their mortgage protection policy.
It’s important to remember that these figures are averages, and actual costs can vary based on factors such as health, lifestyle, and individual circumstances.
For a bespoke quote, speak to your broker. They’ll compare the market and ensure you get the best quote. We’ve a team of fully qualified financial advisors here who’d be willing to assist.
What affects the cost of a Mortgage Protection policy?
As with any insurance policy, there will be certain factors that affect the cost of your monthly premium, and Mortgage Protection is no different.
The following are the key variables that will impact the cost of your premium
- Whether it is a single, joint of dual policy
- The age of the applicant(s)
- Smoking status
- The sum assured (amount of cover you need)
- The length of the policy term
- Any pre-existing medical conditions
- Conversion option
Other factors that may increase the cost of Mortgage Protection
As well as those outlined above, there are other factors that may affect the cost of your premiums.
These will vary depending on your situation but are worth looking at in more detail.
BMI
If you have a higher-than-average body mass index (BMI), your premiums may increase,
Anyone with a BMI higher than 30 could see their premiums ‘rated’. This will increase premiums by an agreed percentage.
Unless it is a severe case, most premiums will be increased by approximately 50%.
Premium ‘rated’ due to high BMI | |
Original Monthly Premium | €60 |
New Premium – rated 50% | €90 |
It is worth noting some insurers are stricter than others. Where one insurer may increase your premium by 50%, another could increase it by 75% or 100%.
Enlist the assistance of your broker and ensure you are getting the best deal possible.
Comparing the market is important as insurers will have different criteria.
Conversion option
Choosing a conversion option on your Mortgage Protection policy will increase your premiums.
However, this does not mean it’s something you should avoid. It’s advisable to include a conversion option as it gives you the flexibility to amend your cover in the future regardless of your health.
Plus, the cost of adding a conversion to your policy is minimal.
Mortgage Protection Premium | |
Without Conversion Option | €24.06 |
With Conversion Option | €25.11 |
The above is for a single applicant applying for €300,000 over 25 years.
Vaping
Vaping has become extremely popular as of late.
However, vaping is considered the same as smoking. Therefore, it will affect the cost of your premiums.
You must have quite 12 months or longer to qualify for non-smoker rates.
What’s the difference between Life Insurance and Mortgage Protection
Sometimes we see clients confuse Life Insurance and Mortgage Protection.
While both offer financial security, it’s crucial to understand the difference between each.
Level term Life Insurance
The most straightforward sort of life insurance is level term. You decide the value and duration of the policy at the outset.
This value and your premium will remain fixed throughout.
If you pass away during the term, it will pay the amount stated to your estate.
Level term Life Insurance will be more expensive as the amount paid out will not change.
Advantages
- You and your family will know the exact amount of a potential payout.
- Premiums will remain the same throughout.
Disadvantages
- Often more expensive than Mortgage Protection
- Inflation may cause your policy’s value to be lower than you anticipated when you pass away.
If you’re unsure whether Life Insurance or Mortgage Protection is more suitable, consult with a broker.
Mortgage Protection (Decreasing Term Insurance)
Mortgage Protection is also referred to as Decreasing Term Insurance.
The amount paid out by the policy will reduce over time. It’s designed this way as it’ll reduce in line with the amount owed on your mortgage.
Advantages
- Often cheaper than Term Life Insurance
- Will clear the Mortgage meaning those left behind will not be financially vulnerable.
Disadvantages
- Premiums remain the same even though the potential payout is decreasing.
- The payout will only cover the outstanding mortgage.
Mortgage Protection safeguards your mortgage repayments in the event of your untimely death. It’ll clear any outstanding mortgage balance.
Life Insurance is a broader form of coverage that provides financial protection to your loved ones upon your death. It does so in the form of a lump-sum payment.
Unlike Mortgage Protection, Life Insurance isn’t tied exclusively to your mortgage.
It can replace lost income, cover ongoing expenses or fund your children’s education.
Some key differences to keep in mind include:
- Purpose: Mortgage Protection focuses solely on covering your mortgage, Life Insurance offers broader financial protection and flexibility for your family’s needs.
- Coverage Amount: Mortgage protection typically matches the outstanding mortgage balance, whereas life insurance coverage can be customised to suit your desired level of financial protection.
- Term: Mortgage protection is typically term-based, aligning with the duration of your mortgage. Life insurance policies can be term-based or permanent, providing coverage for your entire life.
- Premiums: Mortgage protection premiums generally remain level throughout the policy term. Life Insurance premiums can vary depending on factors such as age, health, coverage amount, and policy type.
If you’re still unsure of the differences between Life Insurance and Mortgage Protection, check out our recent article.
Do you need Life Insurance and Mortgage Protection?
It depends.
While it’s not a requirement to have both, in a lot of cases it will make sense to have both types of cover in place.
Every individual or family has unique circumstances that will require thoughtful financial planning.
When evaluating your needs, consider:
- Dependents: If you have dependents, such as children or who rely on your income.
- Income replacement: Life insurance can serve as a replacement for lost income. This will allow you to provide your family with financial stability.
- Long-Term Financial Goals: Life insurance can act as a financial tool to support your family’s long-term aspirations.
- Debt Considerations: If you have other outstanding debts, such as personal loans or credit cards, life insurance can help alleviate the burden on your loved ones by covering those liabilities.
While it’s not mandatory to have both, it can provide a financial cushion for loved ones.
Consulting with your financial advisor will help you choose the best course of action.
Ultimately, the goal is to actively provide peace of mind and financial security for you and your loved ones.
Which provider should you choose for Mortgage Protection?
As with any insurance policy, the provider you choose will have an impact on the price of your premium.
At emero, we aren’t tied to a single provider allowing us to compare the market.
However, price isn’t the only important factor. Although price will play a role, not all Mortgage Protection policies are not created equal.
Different providers will offer different additional benefits.
Let’s first look at a price comparison. After this will look at additional benefits and why they are important.
We can see by taking the average of Level Mortgage Protection the monthly premium is €24.69.
The cheapest including a conversion option is €24.02 while the most expensive is €31.73
The average premium including a conversion option is €26.90.
We can see from above that the average price of Mortgage Protection per month is quite reasonable. We could also recommend taking the conversion option.
For the sake of approximately €2 extra per month it is well worthwhile.
The other aspect when choosing a provider is the free additional benefits offered.
For example, Royal London offers Dual Mortgage Protection for the same price as Joint Mortgage Protection.
This means you’ll essentially get double the cover for the same price. It’s knowing simple facts such as these that make it worthwhile going to your broker rather than a bank.
Banks are limited and tied to a single provider.
What provider offers the best Mortgage Protection?
As we touched on earlier, we aren’t tied to a single insurer and have no allegiance to one.
This allows us to take a step back and compare the market without any biases. However, we do feel Royal London’s Mortgage Protection is a really good offering.
They offer a very good service combined with a solid product. At a glance some reasons to consider Royal London would be:
- Pricing – very competitive on the price of premium and willing to match the lowest on the market
- Double the cover at no additional cost – Dual Life for the same price as Joint Life
- One month’s free cover – your cover will kick in immediately but your payments do not start until the first month has passed
- Conversion option – the ability to convert your policy for a 5% additional premium
They also offer other additional benefits such as their Helping Hand support. This gives policyholders one-to-one personal support from a dedicated nurse from RedArc who can help cope with stress from illness or bereavement.
A combination of all of these is why we often recommend Royal London to clients looking for Mortgage Protection.
This may change in the future but as of October 2022, this would be our preference.
Are there any reasons I may not be able to put a Mortgage Protection policy in place?
Yes, there can be certain reasons why individuals may not be able to put a Mortgage Protection policy in place. Here are a few possible reasons:
Age and Health Restrictions: Some insurance providers may have age restrictions or health criteria that individuals need to meet in order to qualify for Mortgage Protection. If an individual exceeds the maximum age limit or has pre-existing health conditions that pose a higher risk, they may face difficulties in obtaining coverage.
Existing Health Conditions: Certain pre-existing health conditions may make it difficult to obtain Mortgage Protection coverage or may result in higher premiums. Insurance providers assess the level of risk associated with an individual’s health, and if the risk is deemed high, they may either deny coverage or charge higher premiums.
Lifestyle or High-Risk Occupations: Engaging in high-risk activities or having a high-risk occupation, such as extreme sports, aviation, or hazardous work environments, can make it more challenging to secure Mortgage Protection coverage.
It’s important to note that the availability and eligibility criteria for Mortgage Protection policies can vary among insurance providers. Consulting with your broker will help you understand specific requirements and explore alternative options.
What happens if I cancel my Mortgage Protection?
If you cancel your mortgage protection policy, you will no longer have coverage in place. This means that in the event of your death, your loved ones would not receive a death benefit to pay off the outstanding mortgage balance. It’s important to carefully consider the implications before cancelling your policy and to explore alternatives if needed.
Can I change Mortgage Protection provider?
Yes, it is possible to change your mortgage protection insurance provider. If you find a better deal or more suitable coverage with another provider, you can switch your policy. However, before making any changes, it’s important to review the terms and conditions of your current policy and ensure a smooth transition to the new provider.
Why you should use a broker for Mortgage Protection?
Using a broker when organising your Mortgage Protection can provide several valuable benefits.
1. Expert Advice and Guidance: Brokers like us specialise in insurance and have in-depth knowledge of the market. A broker provides personalised advice tailored to your specific needs, taking into account your financial situation, lifestyle, and future goals.
2. Access to Multiple Options: Brokers have access to a wide range of insurance providers and policies. Instead of being limited to a single provider’s offerings, brokers can compare different options, coverage levels, and premiums from various insurers. This allows you to explore multiple choices and find the best policy that aligns with your requirements and budget.
3. Time and Effort Savings: Searching for Mortgage Protection on your own can be time-consuming and overwhelming. Brokers streamline the process by doing the research and paperwork on your behalf. They handle the application process, negotiate with insurers, and present you with the most suitable options. This saves you valuable time and effort, allowing you to focus on other important aspects of your mortgage process.
4. Cost Savings: Brokers can help you find competitive rates and potentially save you money. Due to their relationships with multiple insurance providers, they have a deep understanding of the market and can negotiate favourable terms and pricing on your behalf. Brokers are committed to finding cost-effective solutions without compromising on the quality of coverage.
5. Ongoing Support and Review: Your mortgage protection needs may evolve over time, and a broker provides ongoing support. They can review your policy periodically to ensure it still meets your changing circumstances. Whether you need to make adjustments, upgrade coverage, or explore additional options, a broker will be there to assist you.
How can I calculate the average cost of mortgage protection insurance in Ireland?
The average cost of mortgage protection insurance in Ireland varies based on individual circumstances. To determine the specific cost, it’s best to consult with an insurance provider directly. They will consider factors such as your age, health, mortgage amount, and policy term to provide an accurate quote.
What should you do next?
Hopefully, this guide provided you with clarity. As with anything, knowing the averages and what others pay is always beneficial.
If we were to summarise, we’d recommend keeping a couple of important points in mind.
- Explore your options – do not automatically go with your bank. Compare the market and see what different providers have to offer. What seems like a trivial amount could save you a lot of money in the long run.
- Don’t be afraid to switch – switching Mortgage Protection provider is likely a lot easier than you think. Speak to your broker, assess your options and complete the paperwork. It’s a painless process.
If you’ve any questions or need assistance we’d be more than happy to help.
You can contact myself or any of our team via phone or email.
| [email protected] | |
| Phone | 01 584 4280 |
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