What is the difference between Life Insurance & Mortgage Protection?

Life Insurance and Mortgage Protection are two types of policies you’ll hear about quite often. They will also frequently show up together, which just adds to the confusion.

However, they serve different a purpose and should be distinct from each other.

We wrote this guide to outline the main differences between the two policies as well as some important factors to take into account if you’re thinking about either one.

Before we go any further, let’s look at the key differences between the two.

Life Insurance
  1. Pays out a lump sum should you die with the term of your policy.
  2. The amount of cover is fixed from the outset.
  3. Is more expensive than Mortgage Protection

Please note box – If you are looking for more information on Life Insurance, we have several free guides available.

Mortgage Protection
  1. Pays out a lump sum that will clear your mortgage should you die during the policy.
  2. The amount of cover reduces over time. Known as a decreasing term policy which means the amount of cover reduces over time as your loan amount decreases.
  3. Less expensive than Life Insurance

After reading this guide, you’ll hopefully be in a much better position and understand what best suits your specific needs.

You can also send us an email or give us a call if anything is unclear, and we’ll be happy to clarify.

What is Mortgage Protection?

Mortgage Protection is an insurance policy that pays the balance of a mortgage owed on a property should the policyholder pass away during the term of the policy. 

It is something all homeowners will be familiar with.

Although it’s usually an afterthought and a last-minute panic when the bank informs you that it’s mandatory for you to receive your mortgage.

After likely being through the mill and nearly reaching the finish line, at this point, we’ll sign almost anything.

However, Mortgage Protection should not be handled this way. Firstly, you do not have to purchase your Mortgage Protection from your lender.

In fact, there are many benefits to using a broker for Mortgage Protection.  We already have a guide dedicated to this so we won’t dive too deep.

The average cost of Mortgage Protection.
The below if for two healthy applicants with no underlying medical conditions.

  • Non-smoker
  • Age: 35 yr olds
  • Cover amount: €350,000
  • Term: 25yrs

Cost = €37.57 for Dual with Royal London

average cost of mortgage protection
Average cost of life insurance

Just understand you are not restricted when it comes to buying a Mortgage Protection policy. Organise it ahead of time, seek advice and ensure you get the best cover possible.

You’re likely going to be committing for 20+ years so any savings made will be significant over time.

Let’s look at how what seems like insignificant differences in premiums can cost you over the long-term. Below calculates of the total paid over a 25-year period.

Monthly Premium

Cost over 25 year term







It’s clear to see what may seem like a trivial difference can have a significant impact over time. Although price isn’t everything, be sure to seek advice before making any decisions.

There are also some additional benefits your bank cannot offer which we’ll go through shortly.

Is Mortgage Protection compulsory?

Yes. Mortgage Protection is compulsory for anyone purchasing a residential property in Ireland.

Although there are exceptions in certain circumstances.

Some exceptions where Mortgage Protection is not compulsory are:

  • Anyone purchasing an investment property
  • Those age 50 or older
  • You are unable to get insured due to health issues or occupation
  • You already have a Life Insurance policy in place
Please note – whether a lender decides to waive the need for a Mortgage Protection policy will be at their own discretion. Decisions may vary depending on circumstance.

Do I need to take mortgage protection out with my bank?

No. This is a trap that many people fall into and we can understand why.

You’re at the final hurdle. You’ve gone through the emotional trials and tribulations of buying a home. Then, Mr. Banker says “just one more thing” and the Mortgage Protection paperwork appears.

A quick signature and you’re all set. However, there are a couple of reasons why buying Mortgage Protection through your bank isn’t a good idea. Let’s take a look at some.

Disadvantages of buying Mortgage Protection through a bank

There are quite a few reasons but we’ll focus on the three most important.

There is one notable omission. We left out the price. However, in most cases as well as the points below, using a broker will often also get you a cheaper monthly premium.

1. Banks have a restricted offering

Banks have limited options available to them when it comes to Mortgage Protection.

Whereas brokers like ourselves can compare all providers and all policies, banks cannot.

Banks in Ireland are also all tied agents. This means they are tied to a single insurer and can only use their product offering.

Below we look at which banks are tied to which insurers.


Tied agent of:

Bank of Ireland

New Ireland

Ulster Bank

Irish Life


Irish Life


Irish Life


Irish Life

Choosing to buy Mortgage Protection through a bank limits your options. Perhaps there’s a more suitable policy through an insurer the bank does not have access to.

If you’re committing to a long-term Mortgage Protection policy, it would be foolish not to assess all potential options.

2. No access to dual mortgage protection

Being a tied agent means banks cannot offer you a Dual Life Mortgage Protection policy.

They only have the scope to offer Joint Life Mortgage Protection policies. At this point, you’re probably wondering what the difference is.

Joint Life Mortgage Protection

  • Is paid when the first policyholder dies
  • Benefits will clear the outstanding mortgage

Dual Life Mortgage Protection

  •  Pays out when the first policyholder dies
  •  Benefits used to clear the mortgage
  • The same level of cover on both lives.
  • Cover continues with the surviving policyholder.

In simple terms, Dual Life Mortgage Protection will pay out twice. Once on the death of the first policyholder and again on the death of the second policyholder.

3. The bank will be the owner of the policy

If you choose to purchase your Mortgage Protection through a bank, you’ll likely be part of the bank’s group policy.

This means your policy is part of a group alongside many others rather than an individual policy.

This may cause potential issues should you wish to change providers at a later stage.

The bank will likely cancel your Mortgage Protection policy meaning you will have to start the process from the beginning. As you’ll be older, your new premium will likely be more expensive.

The above are just three points on why it’s better to enlist the assistance of a broker when assessing your Mortgage Protection options.

If you’d like to learn more about whether to choose a broker or a bank for Mortgage Protection, we’ve broken it down in further detail in our guide.

What is Life Insurance?

Life Insurance is a policy that will pay a lump sum should the policyholder die during the term of the agreed policy.

It is used by those with financial dependents (kids) to provide a safety net should something untoward happen.

If you were to pass away unexpectedly, the benefits would help to replace your lost income and relieve the financial burden on your family.

As with Mortgage Protection, it is common for couples to take out a policy together.

Again, we have Joint Life and Dual Life options.

  • Joint Life Insurance – one fixed pay-out on the first death.
  • Dual Life Insurance – pays out a fixed amount on both deaths.

Joint Life Insurance


Dual Life Insurance


The above quote is for a 30-year-old non-smoker, 300,000 cover over 20 years.
The above highlights how a Dual Life policy is only slightly more expensive. The additional benefits it provides, it is something that should be discussed with your advisor.

Calculating how much Life Insurance you need

If you are considering Life Insurance but unsure how much you may need, you are welcome to use our Life Insurance Calculator

Life Insurance calculator

It is a free tool that allows you to calculate how much cover may be appropriate for your specific situation.

As well as the calculator there is also lots of in-depth information showing how to manually calculate your life cover.

We’d recommend anyone unsure about how much Life Insurance they need to read over this particular guide. 

If you’d prefer, you can also go straight to getting your free Life Insurance quote

Options for calculating Life Insurance cover

Do you need mortgage protection and life insurance?

In short, no. It is not a requirement to have both Life Insurance and Mortgage Protection. If you are buying a home, Mortgage Protection will be compulsory. Life Insurance is not.

Mortgage Protection pays off the remainder of your mortgage in the event of premature death. The benefits are paid directly to your lender, not your dependents.

On the other hand, a Life Insurance claim will be paid to your next of kin and dependents should there be a claim.

To clarify, the benefits of a Mortgage Protection claim will go to your bank/lender.

The benefits of a Life Insurance claim go to the spouse/kids. Although these funds could be used to pay off a mortgage, they can also assist with replacing a lost income and assisting with general living costs.

Should you have both?

As with any protection policy, your needs will depend on your specific circumstances.

We know from above that the Mortgage Protection benefits will go directly to your lender.

However, many people also prefer to have a separate Life Insurance policy in place. This will help replace a lost income along with future expenses such as college fees.

The Mortgage Protection payout will keep the family home but the Life Insurance will help protect your family’s lifestyle.

If you are a parent and have kids, ideally you would have both. If you’d like to compare Life Insurance quotes you can use our free quote engine. 

If you’re unsure or have any questions, you are welcome to contact our team

Life Insurance or Mortgage Protection, which should I choose?

This can be difficult to answer without knowing your specific circumstances.

If you have financial dependents then ideally you would have both. Although, there is a cost involved, so it might not be an option for everyone.

However, it is advisable to have a separate Life Insurance policy as well as your Mortgage Protection.

If you have no financial dependents then you’ll be fine with your standard Mortgage Protection policy.

If you’re unsure what may be best for you then you are welcome to contact myself or any member of our team.

We can assist by assessing your overall situation and answering any questions you may have.

From here you’ll be better placed to make a decision.

<b>Ian Kennedy QFA</b> <br>Client Services Director</br>
Ian Kennedy QFA
Client Services Director

Ian is the Client Services Director at emero Insurance and has worked within the financial sector for the past five years. If you would like to chat with Ian directly, please get in touch with him at 

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[email protected]


01 584 4280

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Phone: 01 584 4280

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