What’s the difference between mortgage protection and life insurance?

Mortgage Protection is a specific type of life cover designed purely to clear your mortgage if you die during the loan term. The cover amount reduces over time in line with your mortgage balance, making it the most affordable form of life cover as the insurer’s risk decreases each year. The policy is normally assigned to the bank, so if you pass away, the mortgage is cleared but no payment goes directly to your family.

Life Insurance (level term assurance) offers more flexibility. You choose the cover amount and term, and the cover stays level throughout the policy. If you take out €300,000 cover, your family receives €300,000 whether it’s year one or year twenty. This lump sum can be used for the mortgage, living costs, education, or any other family needs. The money goes to your beneficiaries, not the bank, and they decide how to use it.

Key differences:

• Mortgage protection: cheaper, assigned to bank, balance reduces over time
• Life insurance: more flexible, amount remains level, family decides how to use it

Many people in Ireland combine both: mortgage protection to satisfy the bank’s requirement, plus separate life cover to ensure the family is financially secure.