Mortgage Protection

A mortgage protection policy is also known as a decreasing term assurance policy. Essentially, it is a form of life assurance that starts out with a specific amount of death benefit cover, usually to reflect your mortgage amount, over a specific term, which will also normally match your mortgage term. E.g. a mortgage of €300,000 over a 30 year term = a policy of €300,000 over a 30 year term. The level of cover reduces in line with a typical reducing mortgage balance over the term of the policy.

It is the very basic, entry level of life assurance and the sole purpose of the policy is to clear, in full, any outstanding mortgage balance in the event of the death of one of the people covered by the policy, usually the people named on the mortgage.

There is sometimes some confusion between a mortgage protection policy and a mortgage repayment protector policy. A mortgage protection policy does NOT cover your mortgage repayments.

Why would I need it?

When you borrow money from a lender in Ireland to buy a family home or if you use your family home as security for a loan, you must have a life assurance policy in place to clear the loan in the event of death before the loan has finished. There are some exceptions to this, which your advisor can discuss with you in more detail separately.

You would have taken out a mortgage protection policy if you took out an ordinary repayment mortgage to buy your home.

Pricing

This is one of the few types of life assurance that you can select based on pricing as all mortgage protection policies from all Irish life assurance companies will effectively do the same thing – clear your loan if you die during the loan term. With mortgage protection policies, you pick the cheapest provider.