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Mortgage Protection Insurance Ireland

Mortgage Protection Insurance is used to protect both the borrower and the bank against the risk of the borrower dying within the term of the mortgage

Mortgage Protection Insurance

Mortgage protection is the most cost effect 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 the 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.

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A bank is a tied agent to just 1 of the protection providers in Ireland. 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. Ucompare have access to all top 6 mortgage protection providers in the Irish market, providing you with independent and fair analysis of the market. We only compare the prices for you and laid out the key information in the most user-friendly way possible, at the end choice is yours.

What is Mortgage Protection?

In simple terms, a Mortgage protection is an insurance policy that covers the cost of your outstanding mortgage in the event of death before the mortgage is fully repaid. According to the law, a lender will ask for this type of cover before you take out a mortgage. There are some exceptions to this rule for example if you are over 50-year-old, if you are buying an investment property, if you have a life insurance policy etc.


Mortgage protection insurance is the most cost effective form of life insurance 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.

Reducing term cover: This policy is set up on a decreasing basis which mean that the amount of cover will decrease over the term in line with the amount outstanding on your mortgage. This is a fixed term policy which ends once the mortgage is paid off. This is the cheapest form of Mortgage protection available in the market.

Level term Policy: Under this insurance policy, the amount of life cover you are insured for and the premium you pay for the policy remains same throughout the term of the mortgage. The insurance company will pay out the insured amount in case of your death and any balance left over will be paid out to your dependent or go to your estate.


You can add Serious Illness Cover as an additional cover to your mortgage protection insurance policy by paying extra premium. This gives you a piece of mind that your mortgage will be covered not only If you die, but also if you suffer from serious illness until you recover. You need to be careful as the Serious illness needs to be covered under the policy. Due to extra layer of cover, this policy tends to be more expensive.


Life insurance policy gives financial protection to your loved ones and dependants if you die, not to pay off your outstanding mortgage amount. Having said that, you could assign your life policy to your mortgage provider as long as the insured amount is sufficient to cover your mortgage in full and it runs longer or for the same term. In case of any mishappening, balance left over on your life policy after paying the mortgage will be paid to your dependants. Bank would normally ask you to sign a “Notice of Assignment” and send a copy of the signed letter to the insurer.


If you have a joint mortgage on a property, both people need to a mortgage protection insurance which runs for the same duration as your mortgage.

Why is Mortgage Protection cheaper than ordinary Life Insurance?

Under Mortgage protection, the pay-out amount decreases in line with your mortgage therefore each year there is less cover needed so the premium is cheaper compare to a life insurance policy.
Under Life Insurance, the benefit or the lump sum amount to be paid remains the same for the term of the policy. Only exception to this is if you have selected the indexation option where the payment amount increases every year in line with the inflation.


Is Mortgage Protection Insurance suitable for interest only mortgages?

If you have an interest only mortgage where only the interest is paid every month, you should be taking out “level term assurance”. Interest only mortgages do not decrease as there is no capital being paid off monthly. If you have reverted to interest only midway through your mortgage, you can now convert your mortgage protection into the type of insurance that is needed to cover it from that point. This is a relatively new feature available on mortgage protection.


You can always switch your mortgage protection policy and change provider if you can get a cheaper quote from other providers. You don’t need to take a new policy and you can simply switch to a new provider by reassigning your existing policy. This is a common practice because people take out the initial policy from the bank in order to speed things up for mortgage, even though it’s not the best mortgage protection cover in Ireland. Come second year people shop around and switch the policy to new provider with competitive quote. You could save up to €20,000 over the term of your mortgage protection cover. If your current policy is through a group scheme, your current policy will be cancelled and you need to get a new policy. Bear in mind the new policy could cost your more as you will be older than when you first took out the policy and you current health condition will also have an impact on the premium.

Also look at Serious Illness Cover & Income Protection Insurance.

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