Mortgage protection is the standard life cover for mortgages, but you can opt for life insurance instead if you prefer. Here’s how they differ:
Mortgage Protection is designed purely to clear your mortgage if you die during the loan term. The cover reduces over time with your mortgage balance, making it the cheapest form of life cover. The policy is assigned to the bank, so if you pass away, the mortgage is cleared but nothing goes directly to your family.
Life Insurance (level term assurance) provides more flexibility. You choose the cover amount and term, and the amount 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. The lump sum can be used for mortgage, living costs, education, or any family needs. The money goes to your beneficiaries, and they decide how to use it.
Summary:
- Mortgage protection: cheaper, assigned to bank, decreasing balance
- Life insurance: more flexible, level amount, family controls usage
Many people in Ireland combine both: mortgage protection to satisfy the bank’s requirement, plus separate life cover to ensure family financial security.
