Mortgage Protection Insurance
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What is Mortgage Protection Insurance?
Mortgage Protection Insurance is a dedicated type of Life Insurance policy that is designed to pay the balance of any mortgage owed on a particular property.
Should you die during the agreed term, the Life Insurance company will clear the balance of the mortgage.
If you have a joint mortgage, both people will need Mortgage Protection Insurance. The policy must run for the same length of time as your mortgage.
For example, if your mortgage is for 25 years, the Mortgage Protection Policy must be in place for the same amount of time.
Key note 📌
You are not required to purchase your Mortgage Protection Insurance through your lender i.e. your bank. In many cases a Financial Broker can compare the market and find a better deal due to not being tied to a specific insurance company.
Learn more in our: Broker Vs Bank Guide
How we can help you get Mortgage Protection
At emero, we work alongside all of Ireland’s leading insurers. This means our advisors can compare the market and find you the most suitable policy.
Get a Quotation Online
How much does Mortgage Protection Insurance cost
The cost of a Mortgage Protection policy will depend on certain variables. These include:
Age
Health
Term of Cover
Amount of Cover
Smoking Status
Age
Health
Term of Cover
Amount of Cover
Smoking Status
If you would like to see how Mortgage Protection might cost, you can use our free quote engine. 💡 Did you know?
You do not have to buy Mortgage Protection Insurance through your bank.
💡 Did you know?
You do not have to buy Mortgage Protection Insurance through your bank.
Why use emero for Mortgage Protection Insurance
Multiple providers
Experienced advisors
Cost effective
Broker Vs Bank 📌
Looking for more information? We have written an in-depth guide of some aspects to consider before purchasing Mortgage Protection Insurance through your bank. Learn More
Mortgage Protection Insurance Process
At emero, we have a simple process. We assess your situation, scan the market and find you the right cover.
1
Whole Market Quotes
2
Find the Correct Cover
3
Protect Your home
emero works alongside all the major Life Insurance companies in Ireland and is regulated by the Central Bank of Ireland.
We pride ourselves on supporting our clients by providing comprehensive guides on various types of cover.
You are welcome to check out the information below.
Editorial Staff
Last Update: August 2022
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For many people, your home is likely your most prized possession. Therefore, ensuring it is protected is important.
Mortgage Protection Insurance will run for the same length as your mortgage and will pay off your loan should you die during the course of the policy term.
It is a policy specifically designed to repay loans and will continue to decrease with your loan over the policy term.
Is Mortgage Protection compulsory in Ireland?
Yes, if it is on a residential property. Under the Consumer Credit Act, 1995, the lender must ensure that mortgage protection is in place before approving a mortgage.
However, there are exceptions where mortgage protection is not compulsory.
Exceptions to Mortgage Protection
In certain circumstances, you may be exempt from needing Mortgage Protection Insurance. Below are some of the reasons you may be exempt from Mortgage Protection:
- You are purchasing an investment property.
- You are aged 50 or older.
- You are unable to get insured due to health issues or occupation.
- You have a life insurance policy already in place.
Whether the lender decides to waive the need for a Mortgage Protection policy will be their own decision. This may vary depending on the specific circumstance.
Is there a difference between Mortgage Protection and Life Insurance?
Yes. Mortgage Protection is in place solely to clear the remainder of a mortgage should you die within the term. Whereas Life Insurance pays out a tax-free lump sum and is often used to replace a lost income.
Mortgage Protection is also a decreasing policy. This means as the balance of your mortgage reduces over time, the amount paid out by the policy reduces with it.
In a term Life Insurance policy, the amount paid out will remain the same throughout the term.
Based on a €200,000 mortgage over 30 years at 3.5% interest
| Point in Time | Life Insurance pay out | Mortgage Protection policy pay out |
| End of year 1 | €200,000 | €196,000 |
| End of year 5 | €200,000 | €179,000 |
| End of year 10 | €200,000 | €154,000 |
| End of year 20 | €200,000 | €90,000 |
| End of year 25 | €200,000 | €49,000 |
Above we can see how the amount a Mortgage Protection policy will pay out decreases year on year. This is to keep in line with your mortgage as it reduces the more you pay off.
It also highlights the importance where in some cases, a Mortgage Protection policy and life insurance policy may be needed.
The Mortgage Protection policy will pay off the outstanding mortgage but will not replace any loss of income.
Cost - Mortgage Protection vs Life Insurance
As Mortgage Protection is a decreasing policy, the premiums will cost less.
Below we look at a comparison of the two policies. In this example, we take a 35-year-old, non-smoker, looking for 25 years cover for €250,000
Life Insurance Quote – with a conversion option
Insurer | Premium Per Month |
New Ireland | €19.50 |
Royal London | €21.07 |
Zurich | €24.36 |
Mortgage Protection Quote
Insurer | Premium Per Month |
Royal London | €14.28 |
Zurich | €11.45 |
New Ireland | €15.30 |
The above illustrates the difference in premiums between a Life Insurance and Mortgage Protection policy.
It is worth noting that we included a conversion option in the life insurance policy which would have increased the premiums.
Are there different types of Mortgage Protection Insurance?
There are two different types of Mortgage Protection policies available. Although, a reducing term policy is much more common.
Reducing Term Cover
This is the most common type of Mortgage Protection policy. The amount of cover reduces as you pay off your mortgage.
The cover will reduce at the rate of interest agreed at the outset. As you start your monthly payments, the amount of cover you have steadily decreases throughout.
In the event of a claim, whatever is left on the balance of the mortgage is paid off.
This cover is suitable for an annuity-style mortgage. This is where the mortgage will consist of playing a specific amount each month until the end of the term.
At this point, the mortgage should be cleared. During the term, your payments will consist of two elements:
- Loan interest payments
- Capital payments off the balance
Often at the beginning, a large portion of your repayments will go towards paying off the interest. The portion paying interest will then reduce over time and more capital will be paid off.
This is the lender’s way of safeguarding themselves.
Level Term Cover
Level term Mortgage Protection cover is uncommon. Most will have a reducing term cover policy.
With a level term cover, the amount to be paid out in the event of a claim remains the same throughout the policy term.
This type of cover would be suitable for interest-only mortgages.
In many cases, an interest-only mortgage would be suitable for buy-to-let borrowers and those with investment properties.
In this example, monthly repayments solely pay off the interest on the loan and no capital repayments are made.
How is an interest only Mortgage repaid?
In the case of an interest-only mortgage, the loan amount is usually paid in two ways:
- By taking out a pension or endowment policy. This will ideally build up and be able to repay the original amount borrowed.
- Eventually selling the property and using the proceeds of the sale to repay the loan.
However, there is no guarantee that either of the above methods will be enough to clear the original loan amount.
It is for this reason this interest-only style mortgages have fallen out of favour among buyers.
How much does Mortgage Protection Insurance cost?
The cost of Mortgage Protection Insurance will vary depending on a couple of important factors. These factors are:
- How much your monthly mortgage repayments will be
- Over how many years will you be making these monthly payments
- Whether you and/or your partner smoke or not
- What is the age of the borrower(s)?
A combination of the above will allow you to get an accurate figure of how much a Mortgage Protection policy may be.
Example 1 – John | Age 35 | Non-Smoker | €380,000 over 25 years
Insurer | Premium Per Month |
Royal London | €20.18 |
Zurich | €20.96 |
New Ireland | €21.62 |
Example 2 – Lisa| Age 35 | Smoker | €380,000 over 25 years
Insurer | Premium Per Month |
Royal London | €37.00 |
Zurich | €38.67 |
New Ireland | €40.37 |
The above examples also highlight the effect being a smoker will have on your premiums. Smoking can increase your monthly premiums by almost 50%.
Where can I buy Mortgage Protection Insurance in Ireland?
Firstly, it is worth pointing out that you do not have to take out a Mortgage Protection policy with your mortgage lender. i.e., your bank.
Many do it for convenience, but it is not compulsory.
When taking out your mortgage, the bank will likely provide you with their Mortgage Protection offering. However, this will be their rates only and will not include a comparison of the market.
Using a broker to assess the market can often significantly reduce your monthly premiums.
You are not obliged to purchase Mortgage Protection from the bank that gives you the mortgage. It is also illegal for a bank to offer a mortgage on the condition you take Mortgage Protection from the same bank.
When you’re looking to purchase Mortgage Protection, you have three options:
Life Insurance companies
An option may be to go directly to a life insurance company. However, should you choose this option you are in a similar predicament as going through your bank.
Should you choose a specific life insurance company, they can only offer you their rates and their specific product features.
This means you will be unable to properly assess the entire market and find the best value for your specific situation.
Getting Mortgage Protection through a broker (emero)
A major benefit of using a broker to purchase a Mortgage Protection policy is their ability to assess the market.
For example, at emero, we have an agency with all the major life insurance companies in Ireland. This means we can discuss your situation and then scan the market for the best fit.
We can look at offerings from the following:
- Aviva
- Zurich
- Royal London
- Irish Life
- New Ireland
It is worth noting that price isn’t the only factor when deciding who you will go with. Within their Mortgage Protection offerings, companies offer different additional benefits.
Should you have any health issues, certain companies may be okay with this and are prepared to offer you a policy while others may not.
This is another reason why restricting yourself to one bank or one provider may be a bad idea.
Comparing Mortgage Protection Insurance policies
Comparing the market and using ‘real life’ examples can often be a worthwhile exercise.
For example, let us compare the market for a 37-year-old couple looking for Mortgage Protection for a €400,000 loan over 25 years.
Insurer | Premium Per Month |
Royal London | €34.67 |
Zurich | €36.98 |
New Ireland | €43.34 |
Aviva | €44.30 |
Irish Life | €55.55 |
The above illustrates the significant differences in potential premiums across the different providers. It is for this reason that assessing the entire market is so important.
What may seem like a trivial difference can have a significant impact over many years.
Below we look at an example of the cheapest premium versus the most expensive.
Cheapest | Royal London – €34.67 |
Most Expensive | Irish Life – €55.55 |
Difference (per annum) | €250.56 per year |
Years paying premium | 25 |
Total Additional Cost | €6,264 |
The above example highlights the significant impact a slightly increased premium can have over the course of a mortgage. A difference of slightly over €20 per month equates to over €6,000 in the long term.
Many people fall into the trap of thinking that such a small difference is not important. However, as we see from the above, it can be costly over time.
This is also where buying Mortgage Protection from a bank becomes an issue.
All major banks in Ireland are tied to insurance companies.
Bank of Ireland is tied to New Ireland whereas AIB, KBC, Ulster Bank, and Permanent TSB are all tied to Irish Life.
Mortgage Protection Insurance with pre-existing conditions
Having a specific health condition should not affect your chances of getting a mortgage.
There are some extreme cases where your application may be declined on such grounds, but these occasions are rare.
In some cases, your application may be postponed. This is not ideal but often means the underwriters need more time to decide. You may also be receiving treatment at that point which is another factor.
In cases with pre-existing medical conditions, you may be asked to complete an additional medical questionnaire.
If it is a more serious or long-term illness, the insurer may require a doctor’s report.
What are my options if my Mortgage Protection application was declined?
If you have applied for Mortgage Protection and been declined, there are still some options available.
Below are some of the options to pursue following a declination.
- Get another opinion
As we spoke about earlier, there are several options when it comes to insurers offering Mortgage Protection.
Using a broker is the easiest way to scan the market. Plus, your broker will likely have experience with similar situations. They may also know if a particular insurer may look more favourably upon your illness or medical condition.
- Define the reason(s) for refusal
Asking exactly why you have been refused cover should be your next port of call.
Also, asking whether you have been refused or postponed is also important. If postponed, what is the timeline? Has the insurer agreed to reassess you after a certain period.
These are all important questions that must be asked.
- Analyse the report/reason(s) for refusal
After receiving the reason or reasons for refusal, scrutinize the report in detail. In most cases, your GP would have been asked for a report.
However, it is important to check the details your GP has provided. Ensure that no mistake has been made and that all medical records provided are correct and up to date.
There are other steps and measures that can be taken when you have been declined. Although the above steps are a good starting point.
If you find yourself in this situation, it may be worth contacting us to see if we can assist.
We have helped several clients in the past in similar situations. Although we cannot guarantee that we will be able to get you cover, we do promise to assess the market and do our best.
Did You Know 📌
At emero, we will compare all of Ireland’s leading Insurance houses and provide you with the best cover for your situation. Contact Our Team
Mortgage Protection Quotation
Mortgage Protection Insurance - FAQ's
Yes. There is a myth that you are unable to switch your Mortgage Protection policy but this is untrue. As with any type of insurance, you are free to survey the market.
In some cases, you may be able to find a cheaper policy by shopping around. All insurers will quote based on the same factors such as age, smoking status, amount of cover needed, and the term.
However, if you were previously a smoker when you originally started your Mortgage Protection policy there may be potential savings to be made.
Pro Tip 📌
Do not cancel your current Mortgage Protection policy until your new policy has been issued.
If you are considering switching to a new provider, start by contacting a member of our team.
From here we can assist and see whether there are savings that can be made. In some cases, keeping your current policy may be the best course of action.
Yes. Although if you are switching providers it is important that you are not uninsured at any point. As with any insurance product, take time to shop around to find the best fit for your situation.
No.
You have the option of purchasing Mortgage Protection Insurance from any regulated provider.
In some cases, people choose to get Mortgage Protection Insurance from their lender but this is not compulsory. You may save a significant sum of money in the long term by using a financial broker.
Banks are often more expensive for Mortgage Protection Insurance as they have limited products and are tied to specific Life Insurance companies.
