What is Mortgage Protection?

To quote the Ronseal ad, ‘It does what it says on the tin’ – mortgage protection is not too dissimilar.

Mortgage protection is the most cost effective form of life assurance and is used most widely to protect both the borrower and the bank against the risk of the borrower dying within the term of the mortgage.

It is cost effective as the amount of life cover that is paid out is matched to the amount outstanding on the mortgage always. So as the mortgage decreases, so does the life cover that is attached.

A mortgage provider will almost always ask that you have a policy like this to protect themselves before they will agree to allow you to draw down your mortgage. They will insist that they are the first ones to receive the benefit in the event of your death. They can offer to help with this, but you are entitled to shop around and obtain the best policy in the market. There is no guarantee that the bank is doing this for you, especially when they only deal with one life insurance company!

WHY “BEAT THE BANK” INSTEAD OF MY BANK?

A bank is a tied agent to just one of the protection providers in Ireland. I should know because I worked in one for four years! There is no assurance that you are getting the best price or the best product because the bank doesn’t have access to all the providers in the market. We have access to all top 5 mortgage protection providers in the Irish market – Aviva, Irish Life, New Ireland, Royal London & Zurich – providing you with the cheapest and best out there in the Irish market.

WHAT HAPPENS IF I DIE?

Taking the unpalatable one first, namely getting caught by the ‘Grim Reaper’ – in this case your policy is triggered and the life company pays the amount of cover on the policy to you/your bank and your mortgage loan is cleared. This ensures that your partner/spouse and family do not have the added financial burden of trying to cope with paying off a sizeable loan with one the main funders of these repayments, having departed the stage.

Your need to knows…

• It can be done in single names or joint names. In the latter case the claim is always paid on the first death.

• It needs to be legally assigned to the bank which is very straightforward and should only take a couple of days although banks typically will say it takes longer if they are not providing the mortgage protection policy themselves. We can provide you with the deed of assignment

• You can switch your cover to another provider at any stage of the loan term. We do this regularly as it saves clients a lot of money as typically they have been sold an expensive policy by their bank in the first place! Note: it is crucial never to cancel your existing policy until your new policy is ready to go live.

• There is no value in the policy. if you clear your mortgage earlier than the loan term make sure and cancel your mortgage protection policy as it won’t have any value at maturity i.e. when original loan term it was linked to, expires.

• Children’s cover comes as a benefit with most plans at no extra cost although hopefully it is never availed of. For example, Royal London’s children’s cover on Mortgage Protection policies is €5,000 and covers the life assured(s) children from the age of 3 months up to age 18 or 21 if in full time education.