Mortgage Protection Frequestly Asked Questions

If you are taking out a mortgage you will require a mortgage protection policy as one of the conditions of your mortgage facility. You will also be required to assign this policy to your lender.This assignment has the effect that in the event of a claim, the life insurance company will pay the proceeds of the mortgage protection policy directly to the lender to clear the mortgage.

Please note that the mortgage protection policy is written on the basis that you keep your mortgage payments up to date.

As noted above mortgage protection insurance is a form of life insurance policy.

Most life insurance policies have an insurance pay out that does not change or in fact increases marginally upwards each year to take account of inflation.

The payout on a mortgage protection policies decreases over time in line with the decreasing balance on your mortgage. These policies are specifically designed to pay off your mortgage with the intention being that the property will be free of debt for the surviving occupiers.

We have set out below a range of frequently asked questions about mortgage protection insurance, to assist you in your understanding of this form of life insurance cover.

Feel free to email us at info@mortgages.ie with any questions you may have or you can call us on 01 8327250 and chat to us.

 Check how much you can save here!


What is mortgage protection insurance?
Mortgage protection insurance is a life insurance policy designed to clear the balance owing on a mortgage.The insurance company will clear the mortgage if the policy holder/s passes away. Like all insurance policies, terms and conditions appl, including the need to maintain your policy payments up to date.  
In Ireland, Mortgage Protection Insurance is generally required for all individuals taking out a home mortgage, if they are 50 years old or less.
Premiums for mortgage protection policies start from €10 per month.

Do I need to take out Mortgage protection with my mortgage lender?

You are free to seek independent advice and deal with the best provider.

We will always provide better value than the mortgage protection quote you receive from your lender.

We will provide you with the best available product from Ireland's leading Life Insurance Companies and you will save money as a result.

We receive calls every day from customers who were sold expensive mortgage protection policies through their lenders and who want to save some money and ensure that they still have adequate protection in place.

What is the difference between mortgage protection insurance and life insurance?

Mortgage protection insurance is a special form of Life Insurance used when somebody is taking out a mortgage.

Mortgage Protection Insurance is a life insurance policy specifically designed to pay off the balance outstanding on your mortgage. The balance on your mortgage reduces over time and the mortgage protection policy is designed to clear the outstanding balance.

The principal difference between a mortgage protection insurance policy and typical term life insurance is that the the amount insured does not reduce in a term life insurance policy.

Example comparing pay outs on a term life Insurance policy and a mortgage protection policy.

Based on a €200,000 mortgage over 30 years at 3.5% interest

Point in Time

Life Insurance pay out

Mortgage protection policy pay out

End of year 1

€200,000

€196,000

End of year 5

€200,000

€179,000

End of  year 10

€200,000

€154,000

End of year 20

€200,000

€90,000

End of year 25

€200,000

€49,000

 

 

The above table illustrates the difference in pay outs under both policy types. Mortgage protection is cheaper than straight life insurance because the potential pay out is less.
However in many instances the difference in price is very small when comparing both types of cover, especially for young policy  holders.

Many of our home buyers take out a term life insurance policy instead of a mortgage protection policy. In the event of death, the mortgage would be discharged and the difference between the amount used to clear the mortgage and the insured amount is available to the remaining party to the policy or to the deceased persons estate.

 

How quickly can I arrange mortgage protection insurance cover?
Mortgage protection insurance underwriting systems are computer based, facilitating instantaneous decision making.
Quite often the fastest way to get approval is to call us on 01 8327250 and we can go through an online reflexive application allowing you to have a decision at the end of your call. 

Most mortgage protection policies can usually be turned around in a few days.

If you have an existing medical condition that necessitates corresponding with your doctor, the turn around time will be longer.



Why are banks more expensive for mortgage protection insurance?

Banks provide a range of services to customers including their core product, mortgages. Banks are not insurance companies ,so when they are selling a mortgage they also use this opportunity to provide other services, including home insurance and mortgage protection insurance.

Unlike mortgages.ie who act as an intermediary and who offer and advise on the best  products and prices from a range of lenders and life companies, banks use just one life insurance company when it comes to life insurance or mortgage protection.


The major mortgage lenders in Ireland are as follows:

  • Bank Of Ireland
  • AIB
  • Ulster Bank
  • KBC
  • permanenttsb


With the exception of Bank of Ireland, all the other banks are tied to Irish Life Insurance for life insurance and mortgage protection.
Bank of Ireland uses its subsidiary New Ireland insurance for life insurance and mortgage protection.

On the other hand we search the Life Insurance Market in real time for the best deal and offer exclusive discounts to our customers, typically in region of 15% to 20% lower than available if you use a bank.

For this reason our discounted quotes will always result in in better value cover than you will get through dealing with your bank.


 

Explain how our mortgage protection calculator works?
Our Mortgage protection Insurance calculator works by searching all the major Life Insurance Companies for their mortgage protection quotes.
We display the quotes returned and above this we display our best  price after taking account of special discounts available to us which we pass on to you in full.

The calculator will also give you discounted figures for life insurance and serious illness.

Our mortgage protection advisers will discuss the merits of particular products and insurance companies with you when assisting you in arriving at a preferred choice.
What are the implications of Corona Virus for Life Insurance and Mortgage Protection Insurance?
Corona Virus

New mortgage protection policies
If you wish to take out a new policy you will be required to answer a number of question in relation to the virus:
  • Whether you have it or had it ;
  • whether you have been in close contact with somebody who has tested positive for the virus.
Life insurers want to be satisfied with the following::
  • If you had the virus that you have made a full recovery.
  • If you have been in close contact or need to isolate the insurer will wait until the isolation period is over to see that you have not contracted the virus.  


We deal with all the major Life Insurance companies and this gives us the flexibility to target particular life companies. based not alone on price but also on underwriting requirements.

Sample Questions

  1.    Have you tested positive for CV-19   

  2.    Within the last 30 days, have you

(a)    experienced symptoms of a new or unexplained continuous cough, a high temperature or fever, breathing difficulties or any other symptoms
of CV-19
 c)   been self-isolating due to symptoms of CV-19? 

d)   been advised to self-isolate for any other reason? 


Underlying medical conditions
It is possible that underlying medical conditions may result in deeper scrutiny by underwriters, leading to loading or postponement, especially if the virus has been shown to impact negatively on individuals with that specific condition.  


Existing Mortgage protection policies

Your existing mortgage protection policy includes cover for the death of the policy holder or of either of the policy holders in a joint policy.

Disclosure
If a death is caused by the corona virus the policy would still pay out as normal.
It would not pay out where a policy holder had knowledge that they had the virus but failed to disclose this fact in their application.
Why do I need mortgage protection?

Under the Consumer Credit Act 1995 (as amended), a Mortgage lender is obliged to ensure that a Life insurance policy is in place to cover the balance due on a mortgage, in the event of the death of a borrower, or in the case of a joint mortgage, in the event of the death of one of the borrowers.

The principal exceptions to these requirements are:

  • Where the mortgage is taken out in respect of a property that is not the principal private residence, no life insurance is necessary .
  • No mortgage protection is required where the borrower is over 50 at time of Loan approval.
  • It is not mandatory where the premium is excessive due to medical issues.

Important note. The fact that mortgage protection is not required under the exceptions noted above, should not stop you from seriously considering taking out a policy.
In relation to the exceptions, where taking out a policy is not required by law, it remains at the lender's discretion whether or not to insist on a mortgage protection policy as a condition of a mortgage.
For further information on the consumer protection Act please click Here

What is dual mortgage protection cover?
Most mortgage protection policies are joint policies. this means that the policy pays out once - on the first death only.
With a dual policy there can be two payouts, as both parties are covered separately
Royal London currently do not charge extra for a dual policy.( Correct as at 10 June 2021). 

Note. These policies are subject to change.
Your insurance policy terms and conditions are the binding features of your contract.
Do you provide mortgage protection quotes for all the life insurance companies?

Yes, we provide you with quotations from all the major Life Insurance Companies

Our partners account for almost 100% of all mortgage protection business written in Ireland and we select the best products from their range, for you.
 

How do I switch my mortgage protection policy?

The steps involved in switching to a cheaper or perhaps better policy are as follows.

1. Check the level of your existing cover and how much you are paying.
2. Compare your current cost with our best offering by using our mortgage protection calculator.
3. We will go through the alternative quotes with you.
4. We will advise you on cost and merits of switching.
5. Only cancel you existing policy after the new policy has issued

What happens if I stop paying my mortgage protection policy?

Please never stop paying your mortgage protection policy.

It is a specific condition of your mortgage and you will be in breach of your mortgage agreement if you let the policy lapse.
If you are having difficulties meeting your mortgage protection payment, you should advise your lender as soon as possible.

The main reason for continuing to pay your mortgage protection is that If you die and the policy has lapsed, your dependants may not be in a position to afford the mortgage repayments and they could lose the family home

How much does mortgage protection cost?

Use our mortgage protection calculator to calculate the cost of cover.
The good news is that mortgage protection insurance is surprisingly cheap, principally because the balance on cover reduces over the term ( in line with your mortgage) and more importantly the risk off of passing way during the mortgage term is low.
 
Mortgage protection costs are fixed for the duration of the policy.


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Is the first months cover free?
Mortgages.ie and lIfeinsurance.ie have special discount facilities with our Life insurance Companies.

Our Royal London  policies come with free cover for the first month.
Our Zurich policies have free cover from the policy date to the first of the following month.








Which Life Insurance Companies do we deal with?
We provide life insurance, mortgage protection insurance, serious illness cover and income protection from the Insurers below.We have strong relationships with these companies built up over twenty seven years in business.

Irish Life 
Aviva
Zurich
New Ireland
Friends First
Royal London
When should I arrange my mortgage protection insurance?
Once you have identified a property you wish to buy and you know how much your mortgage is going to be, you should contact us to arrange your mortgage protection insurance. Your lender may give you a quote but we will always be better value than a lender. 

Arranging cover early in the process is helpful especially in case there are any underlying illnesses. We can arrange mortgage protection approval and then hold the approval for three months in anticipation of you drawing down your mortgage. If the time moves over three months we may require a simple health declaration to confirm that there have been no changes.to your health status during the period.
What Insurance will I need when taking out a mortgage?
The two essential insurances are :
  • Mortgage protection Insurance or life Insurance policy for the total amount of the mortgage and a term at least equal to the mortgage term
  • Home Insurance to protect your house against fire and other perils.
Popular additional Insurance cover includes:
  • Income protection insurance. This form of insurance pays out up to 75% of your income in the event you are unable to work due to illness or injury. The insurance continues until you return to work or your retirement age.
  • Serious illness insurance .This insurance covers serious illnesses like cancer, heart attack or stroke and the cover can be set up to pay off your mortgage in full if you unfortunate and contract one of these illnesses or other serious illnesses covered by the policy. 
Are all Mortgage protection policies the same?
All mortgage protection policies are not the same. The key and most important feature of mortgage protection policies is that the policy will clear your mortgage, on acceptance of a valid claim, typically evidenced by a death certificate.
There are a range of features in these policies that differ from company to company, some of these features are free and others involve an increased premium.
We will advise on the merits of these other benefits.

·        

Please explain the importance of a duty to disclose all material facts when completing an application.
A mortgage protection insurance application includes a declaration of facts related to your life style and your medical history. The insurance company uses this information to assess the risk when providing insurance. 

If relevant facts are not inclosed or are disclosed incorrectly the insurance may be void, in which case an insurer will not pay out in the event of a claim.

Questions should be answered fully, correctly and truthfully.