How using a broker for Mortgage Protection could save you thousands.
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Buying a home is the biggest purchase most of us will ever make. It’s exciting, scary, nerve-wracking and often overwhelming.
You’ve saved your deposit, kept the bank statements clean and you’re finally ready to purchase your dream home.
You get the nod from the bank but then find out there’s just one more thing… Mortgage Protection.
At this point you’ll sign anything.
However, signing without much thought could potentially cost you thousands of euros over the long run.
Don’t just take my word for it, the Competition & Consumer Protection Commission (CPCC) also state on their website the importance of comparing the market and polices.
You should compare on both price but also the level of cover you’re getting. It’s not a one-size-fits-all approach.
What is Mortgage Protection?
It’s probably worth clarify exactly what Mortgage Protection is to avoid any confusion.
It’s not Life Insurance. Mortgage Protection is a policy that will pay off the balance of your mortgage should you pass away during the term.
It’s compulsory for anyone buying a residential property in Ireland. If you’re buying a home, you need Mortgage Protection.
There are some exceptions such as those over age 50 although it’ll be at the discretion of your lender.
Small savings can make a huge difference
When looking at a long term investment like a mortgage, what may seem like a trivial amount can really add up over the long term.
Many people now have 35-year mortgages. If you were to save €10 per month, you’d save €4,200 in total.
That’s a couple of really nice holidays or a down payment on a new car. Either way, the money will be in your pocket rather than someone else’s.
When taking out Mortgage Protection you have two options.
You can use a bank. However, Automatically defaulting to your bank because they’re your lender is often not the best course of action.
Seeking advice from a specialised broker such as ourselves will allow you to compare the entire market for the most suitable cover.
Where can you buy Mortgage Protection?
Most people take out their Mortgage Protection with a bank that is likely also their lender.
Although in recent times, more and more people are assessing all potential options and using brokers to compare the market.
Taking out Mortgage Protection with your lender (bank) was likely due to convenience. However, it is not compulsory. It will also likely be more costly and offer less benefits.
Should you take our Mortgage Protection through a bank, they can only provide you with their specific offer.
This means you will be unable to compare other providers prices and product offerings.
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Disadvantages of buying Mortgage Protection through a bank
Arranging cover through your lender (bank) may seem convenient. However, it’s just as easy to arrange cover with someone else.
If you already have it in place, switching is often relatively simple.
I’ll be writing about this process in more detail in another blog shortly.
But you’re welcome to contact me if this is something you’d like to discuss now.
Below we look at some of the disadvantages of buying Mortgage Protection through a bank.
1. Banks have a restricted offering
The first issue with choosing a bank for your Mortgage Protection is access.
In Ireland, the banks are tied to specific insurers.
This means they have limited options available with the types of policies they can offer.
Broker vs Bank | ||
Broker | Bank | |
Access to both Dual and Joint policies | ✔️ | ❌ |
Access to all leading insurers | ✔️ | ❌ |
For example, Dual Mortgage Protection will essentially give you double the cover. There’s a breakdown of Dual cover in point four below.
It’s slightly more expensive than a Joint Life policy but gives you better protection.
Knowing the subtleties such as this is where using a broker will get you better cover and save you money in the long run.
2. The bank will be the owner of the policy
Should you choose to buy your Mortgage Protection through your bank, you will likely be part of their group policy.
This means your policy is part of a group alongside many others rather than an individual policy.
A major disadvantage of being part of a group policy are the potential future restrictions.
This may cause issues further down the road should you wish to switch mortgage provider.
The bank will likely cancel your Mortgage Protection policy meaning you will have to start the process from the beginning.
Due to the fact that you’ll be older, the new premium may be more expensive.
Also, you may health issues at this stage and this could impede the process of changing your policy.
If you’re considering switching it’s best to do so sooner rather than later.
3. Banks are tied agents
Buying Mortgage Protection through a bank will mean a lack of choice. In Ireland, the banks are tied agents. This means they are tied to one single insurer and can only use their product offering.
Below we’ve broken down which banks are tied to which insurance companies.
Bank | Tied Agent of |
Bank of Ireland | New Ireland |
Ulster Bank | Irish Life |
AIB | Irish Life |
KBC | Irish Life |
EBS | Irish Life |
This means you are immediately restricted to the insurance policies available to you. There may be a more suitable policy available through a different insurer but your bank can only offer products from their tied agent.
Having flexibility and freedom of choice is important with insurance. Buying Mortgage Protection through a bank limits your options.
4. No access to dual life mortgage protection policies
As the banks operating in Ireland are tied agents, most do not have the ability to offer Dual Life Mortgage Protection.
For example, most banks are tied to Irish Life who do not offer Dual Life Mortgage Protection policies.
This immediately limits your options.
Where possible, Dual Mortgage Protection is something that should be bought. It offers benefits that a joint policy does not have.
Below is an overview of each policy.
Joint Life Mortgage Protection
- Pays out 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.
- Same level of cover on both lives.
- Cover continues for the surviving policyholder.
Please Note
With a dual policy, the level of cover on both lives is the same. For example, you have a €300,000 mortgage.
One policyholder dies while the mortgage and policy are both at €300,000.
This €300,000 will clear the mortgage. There will also be another €300,000 Life Insurance that will remain in place on the survivor as it is a dual policy.
The above highlights the benefits a dual policy has over a joint policy.
5. No bespoke advice
At emero, we specialise in insurance. This means we assist clients on a daily basis and are experts in our field.
We are familiar with the nuances and technicalities associated with the different types of insurance. We also keep inheritance tax planning front of mind when advising clients.
Should you go with a bank, it is likely they will simply showcase their own products to you.
There will be no bespoke advice or long-term planning built in.
Advantages of buying Mortgage Protection through a broker - emero
Using a financial broker will allow you access to a wider range of options and likely a more suitable policy.
Flexibility and freedom are crucial, as they allow you compare all providers.
Some of the main advantages of using a financial broker such as emero for Mortgage Protection are:-
1. Product offering
Using a broker will allow you to utilise their expertise to compare the market.
Banks can only use one insurer’s products, we have access to the whole market.
Although it may be convenient to buy Mortgage Protection through your lender, other options are available.
2. Owning your own policy
Using a broker means you will own your policy. Unlike through a bank where you are part of a group scheme.
This provides flexibility if you want to switch mortgage providers. It’ll allow you to switch providers while keeping the same Mortgage Protection policy.
Brokers can assign your policy to any lender.
3. Cost efficient
Cost should not be the only factor when comparing policies. It may also mean that a policy has less benefits if it is cheaper.
Being able to compare the market will put you in a position to find a lower premium.
At emero, we work alongside Ireland’s leading insurers. This means we can assist you in to comparing the market to find a policy with the benefits you require at the best price.
Who’s the best provider for Mortgage Protection in Ireland?
Mortgage Protection is offered by all of Ireland’s major insurers. Yet, their Mortgage Protection offerings will not be identical.
Each insurer’s policy offering has subtleties. Therefore, it is important to compare the entire market when applying for Mortgage Protection.
Doing some simple research before you choose or change provider could potentially save you a significant amount of money in the long run.
Provider | Offer Mortgage Protection |
Royal London | ✔️ |
Aviva | ✔️ |
Zurich | ✔️ |
Irish Life | ✔️ |
New Ireland | ✔️ |
If you have Mortgage Protection you likely have either a Dual Life or Joint Life policy.
If you are in the process of applying for Mortgage Protection or already have a policy, a Dual Life policy should be sought.
If you would like to discuss your options, please feel free to contact our team.
We can compare your current policy to alternative options available on the market.
Case Study - Savings due to advice from emero Insurance
Although a saving of €25 per month may seem like a trivial amount, this will add up significantly over time.
As many people now have mortgages in excess of 30 years, any savings on a Mortgage Protection premium is substantial.
Below we look at a €25 per month saving over a 30 year period.
Current Premium | New Premium | Savings Per Month |
€50 | €25 | €25 |
Savings of €25 per month over 30 years (term of mortgage) equals €9,000 total.
Switching your Mortgage Protection policy
Switching your Mortgage Protection policy to a new provider is a relatively seamless process.
However, it should only be advised where switching will provide significant benefits.
The process of switching provider includes:-
- Assess your current premium and identify whether you have a joint or dual life policy.
- Compare the market using our quote engine .
- Discuss your options with one of our team.
- Review the potential benefits and/or savings of switching.
- Cancel your current policy after your new policy has been issued.
Please Note
Only cancel your current Mortgage Protection policy once the new policy has been issued. It is important that there are no gaps and that you are not uninsured at any point.
Why choose emero as your broker for Mortgage Protection Insurance?
emero has a proven track record of assisting clients and advising on Mortgage Protection policies.
We offer a bespoke service and treat each case individually. Our advisors have worked in the insurance industry for 20 + years and pride themselves on their customer-centric approach.
Compare Mortgage Protection in 60 seconds
At emero, we compare Ireland’s leading Insurance providers.
What should you do next?
The first step is to assess your current Mortgage Protection policy. Was it purchased through a broker or your lender?
Assess the cost of your current monthly premium.
From here it is usually best to speak with someone. There may be some nuances that a standard quote may not account for.
Speaking with myself or one of our advisors will help you evaluate your options.
I hope this guide has provided you with some clarity.
We all live different lives that include different circumstances and priorities meaning there is rarely a one-size-fits-all solution.
However, it is always worth reviewing your policy.
If you’d like to leave your contact details by clicking the ‘get in touch’ button below, I’d be happy to assist.
Ian Kennedy QFA
Client Services Director
Client Services Director
Thanks for reading. You’re welcome to contact me with any questions you may have or if you’d like to see if any potential savings can be made.
Key Takeaways
- It is not compulsory to purchase Mortgage Protection Insurance through your lender
- Comparing the market could potentially save you thousands of euros in the long term.
- Purchasing Mortgage Protection through a broker such as emero has many benefits.
- Switching your Mortgage Protection policy to a new provider does not have to be a difficult process.
