Everyone with a mortgage needs Mortgage Protection insurance . Your lender will insist on it so they are covered if you die.
It is just a basic form of life insurance that provides life cover for the amount of the mortgage. In he event of your death (or your partner on a double policy) – the mortgage debt will be paid off.
It is not to be confused with Mortgage Repayment Protection – which covers things like illness or unemployment.
Many people just take the mortgage protection insurance offered by the mortgage lender or broker. But there can be significant differences in premiums from the cheapest and most expensive insurers.
There are no differences in the insurance cover provided – you can compare quotes on price alone. (Unlike car or home insurance where the extras and level of cover can vary from one company to another).
Comparsion of Mortgage Protection
In one example – for €300K of protection cover on a mortgage over 25 years for a 30 year old non-smoker.
The dearest quote was 25% higher than the lowest.
Over the term of the mortgage going with the cheaper insurer would save this person €936 euro – not an insignificant amount.
In the example above – Royal London had the lowest price – €12.03 a month.
New Ireland had the highest premium in this example – at €15.15 per month. So for a few minutes of effort shopping around you could save as much as €936 euro.
Another example – a single smoker aged 30 , cover on €300,000 over 30 years:
Again there were differences of around 25% in quotes. Zurich quoted the cheapest premium of €26.79 per month whilst Irish Life was the most expensive at €32.69 a month.
Over the life of the 30 year mortgage, – choosing the most expensive policy would end up costing €2124 more.
Once again – the advice from Money Guide Ireland is to check, compare and calculate. Don’t just accept what you are told by brokers or banks – they may be getting a commission. You would be a long time trying to save €2000 euro in your bank account – but with a bit of checking you could save that amount in one lunchtime.
Figures checked Summer 2020