Mortgage Protection Insurance: Find the Best Option

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A blue house with a contract propped up against it

So you have found your dream house and your mortgage approved by the bank, congratulations! As the majority of cases require a mortgage protection insurance policy before obtaining the funds for the mortgage, we take an in-depth look at what it is. How can you get mortgage insurance, how do you find the best mortgage protection insurance for you, and is it compulsory? Read on to get these answers and more.

What is Mortgage Protection Insurance?

Mortgage protection insurance, also referred to as mortgage life insurance, is a cheaper form of life insurance assigned to cover the remainder of your mortgage payments should you pass on.

On top of giving you peace of mind, mortgage protection insurance is there to ensure any family members or partners who aren’t left unable to pay the mortgage without the benefit of your income.

What is Mortgage Repayment Protection Insurance? Mortgage repayment protection is the second type of insurance available to cover your mortgage monthly payments. Whereas mortgage life insurance pays your mortgage in case of death, repayment protection insurance will cover your monthly mortgage payments for a fixed amount of time in case of temporary hardships. Things like losing your job, being ill or injured, etc.

Is Mortgage Protection Insurance Compulsory?

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Financial institutions must ensure you have mortgage protection insurance before they can deposit the funds into your account. However, it is not compulsory for you to have said mortgage life insurance if you fall into one of these legal exceptions:

  • You are over 50 years of age
  • If the mortgage is not for your main residence
  • Your current life insurance policy is large enough to pay off the mortgage amount
  • You are unable to obtain this insurance due to pre-existing illnesses or have a dangerous job (are uninsurable in other words!)

Compare mortgage protection insurance Although in the majority of cases, home buyers must obtain mortgage protection insurance in Ireland, you are not under any obligation to choose the mortgage life insurance offered by your lender. In fact, it is recommended you compare offers to find the best mortgage protection insurance for you.

What is the difference between mortgage protection and life insurance?

While it could be said that mortgage protection is a form of life insurance, it is a specialised - and cheaper - version of it.

We list the main differences between mortgage protection and life insurance in the table below:

Differences between mortgage protection and life insurance
Mortgage Protection Insurance Life Insurance
Is only valid for the duration of the mortgage term. Is valid until you pass away.
Will only pay back the balance of the mortgage if you perish. Will pay a set amount which can cover more than the mortgage.
Can be purchased only when taking out a mortgage from a financial institution. Can be obtained at any point in time.

Mortgage Life Insurance Tip! If you already have an existing life insurance policy, you can enquire to increase your policy’s coverage to include the value of your mortgage. You will avoid the need for two separate policies while adding protection for your loved ones.

What Insurance do I Need for a Mortgage?

chubby man holding clipboard left

As touched upon earlier, there are two types of mortgage insurance:

  1. Mortgage Protection Insurance.

    Unless you fall into one of the exempt categories, mortgage protection insurance is mandatory. Alternatively, you could consider taking out a standard life insurance policy which would cover the mortgage amount.

  2. Mortgage Repayment Protection.

    Mortgage repayment protection isn’t mandatory, but can add an extra layer of protection in case of partial disability, serious illness, or other incidents which can affect your usual income.

These are the only types of mortgage insurance in Ireland. However, mortgage protection insurance policies can generally be split into two further categories:

  • Single policy
  • Joint policy

Quite simply, a single policy is for just one individual taking out a mortgage, whereas a joint policy is for two or more borrowers. The mortgage protection insurance is paid out when just one of the debtors passes away.

What Does Mortgage Protection Insurance Cover?

This type of mortgage life insurance will only pay off the balance of your mortgage should you die before the end of your mortgage term. We list below other items your policy can cover:

Mortgage Interest Relief The mortgage interest relief programme was launched in Ireland between 2004-2012. If you applied for the scheme, you will receive tax discounts on your interest paid, however, the scheme does not cover your monthly payments as mortgage insurance does.

What Does Mortgage Repayment Protection Cover?

We list below some common benefits that are often included in mortgage repayment protection policies in Ireland. As coverage differs from one to the next, you may want to pay close attention to the fine print and verify which benefits are included with the policy.

  1. Accidental death benefit.

    If you are in the process of taking out a mortgage protection policy but have not completed the procedure yet to start the policy and pass away, some providers will pay up to €150,000 if you die as a result of an accident.

  2. Children’s life cover.

    While children’s life cover is an issue which can be difficult to consider, it is included with some policies. Coverage will usually apply from 3 months of age until 21 and cover can range from €2500 to €7000 per child.

  3. Guaranteed insurability.

    Guaranteed insurability refers to the option of being able to take our extra cover without providing evidence of good health, in certain situations. These situations can include if your mortgage increases or you extend the term of your mortgage.

    While each insurance provider has its own set of terms and conditions allowing their customers to exercise this option, in general exercising this option will depend on the amount you would like to increase your cover by. This option can be useful if you think you may upgrade to another house in the future and need to increase your mortgage.

  4. Reinstatement clause.

    If you cannot, or forget to make a payment, your policy can be cancelled. This option will give you extra time to pay the missed payment and continue your policy. It also means that the insurer may pay out even if a death occurred during the period when payments were missed.

  5. Terminal illness benefits.

    Terminal illness benefit means that your insurer will pay out the amount needed to your bank if you are confirmed to have a terminal illness and are likely to pass away within 12 months.

  6. Waiver of Premium.

    A waiver of premium benefit will stop your mortgage protection premiums if you are unable to work due to disability or illness. If you are paying a high premium, this could be an attractive option and buy you more peace of mind.

How Much is Mortgage Protection Insurance?

The mortgage protection insurance cost will depend on a series of factors, the main ones which will affect your monthly insurance premium are:

  • The size of your mortgage
  • Your health (smokers will also pay more)
  • Your age

In Ireland, the government also levies a 1% VAT charge on mortgage protection insurance costs.

How to Compare Mortgage Protection Insurance?

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As Irish law permits mortgage applicants to shop around for their protection policies, we compare below the cheapest offers from the larger insurance providers for you to determine which is the best mortgage protection insurance in Ireland. The providers are:

Aviva Mortgage Protection Insurance

The blue aviva logo on a white background

Aviva promises quick and easy mortgage insurance through expert advice, and a signature-free process to speed up the paperwork. The signature-free process is available for policies up to a maximum insured value of €1,000,000, however, any medical forms requested will still need to be signed.

Mortgage Protection Insurance cost start as low as €10 per month.

Aviva mortgage protection features:

  • Better rates for non-smokers.
  • Free accidental death cover while your application is being checked.
  • Access to a professional financial adviser who will also deal with the signature-free paperwork.
  • Access to a second medical opinion service is included from the first day that coverage kicks in.
  • Guaranteed insurability.

Available add-ons:

  • Specified Illness cover.

Aviva reviews

While reviews available on Aviva do not relate to its mortgage protection product alone, they can be helpful to give a general overview of the company and its customer service.

Aviva does not have many reviews in Ireland to date, it does hold a rating of 4.6 stars out of 5 on Trustpilot UK. However, it should be noted that the site contains many international reviews and is not an accurate reflection of Aviva Ireland.

Aviva Insurance Ireland holds a 4.5 out of 5 stars rating on Google reviews, but the majority of the reviews deal with Aviva’s car insurance offering.

Customers who were unhappy with the company cited:

  • A long and difficult process with a lot of paperwork needed to make a claim.
  • Poor customer service and the need to chase up issues because of a lack of response.

On the other hand, customers who were satisfied with Aviva spoke of:

  • Reasonably priced services.
  • Quick adjustments to policies where needed.

Bank of Ireland mortgage protection insurance

A white Bank of Ireland logo on a navy background

There is very little information available regarding Bank of Ireland mortgage protection insurance online. You can enter your details online and use the BOI mortgage protection calculator to give you an idea of how much your monthly premium would come out.

Bank of Ireland does not appear to advertise its mortgage protection policy, and we would assume it is generally taken up by customers who take out mortgages with Bank of Ireland. Keep in mind that you are not required to take out mortgage protection insurance with the bank that holds your mortgage, and may make your own arrangements.

Irish Life mortgage protection insurance

The Irish Life logo and name on a white background

Irish Life lays out some very clear points regarding its mortgage protection plan. Namely that you must be between 18 and 74 years of age and have a maximum term of 40 years in order to take it out.

Once again to determine their mortgage protection insurance cost, you will need to use their online calculator or book a consultation with one of their representatives.

Irish Life mortgage protection features:

  • Automatic children’s life cover.
  • Flexible mortgage cover options until the fifth year of coverage.
  • Accidental death benefit.

Available add-ons:

  • Life cover
  • Specified illness cover
  • Guaranteed cover

Irish Life reviews

Unfortunately, Irish Life reviews are thin on the ground. Searching for the company does turn up 2 reviews for Irish Life with a rating of 3.3 out of 5 stars on Trustpilot.

With so few reviews, it is difficult to paint any kind of accurate picture of this provider or its products.

New Ireland Assurance mortgage protection insurance

The New Ireland Assurance logo on a white background

New Ireland Assurance advertises its mortgage protection plan as a highly flexible plan. Indeed it does seem so as they are one of the few providers to offer the option of increasing or decreasing your cover, both the amount covered and the term of cover.

The benefits provided by New Ireland’s mortgage policy include the ability to increase cover if moving house, getting married, or having a child, and paying out a monthly income on death for the remainder of the term should death occur within the last 3 years of the insured term.

New Ireland Assurance mortgage protection features:

  • Life choice benefits
  • Terminal illness benefit
  • Children’s life cover

Available add-ons:

  • None

New Ireland Assurance reviews

Once again, there are not enough customer reviews available on New Ireland Assurance to provide a balanced view of the company. There are 9 comments left on Google reviews for an average of 2.3 out of 5 stars, and 3 reviews on Trustpilot for a rating of 2.8 out of 5 stars.

Royal London mortgage protection insurance

The Royal London logo

Royal London Ireland (formerly Caledonian Life) has an impressive mortgage protection offer with an option rarely seen - Dual Life cover. Dual Life cover means that not only will your mortgage be settled with the bank upon your death, but nominated beneficiaries will also receive a cash payout, similar to a Life Insurance lump sum.

In addition, there is a Helping Hand service offering personal support from a Nurse Advisor to help your loved ones cope with illness or bereavement.

Royal London mortgage protection insurance cost start as low as €10 per month which includes the 1% VAT.

Royal London mortgage protection features:

  • First-month free cover
  • Helping Hand
  • Guaranteed Insurability
  • Terminal Illness Benefit
  • Children’s Life cover

Available add-ons:

  • Specified Serious Illness cover
  • Dual Life Cover
  • Conversion option (for 5% more on the premium)

Royal London reviews

Royal London comes out decent in customer reviews with a 3.6 out of 5-star rating from Trustpilot.

Customers who were unhappy with Royal London complained of having to chase up Royal London while going through probate and bereavement, to get the necessary paperwork.

Satisfied customers have stated that they found the claims process very quick and straightforward and that on several occasions the company had tracked down previous customers to return money from cancelled policies.

VHI mortgage protection insurance

The VHI logo on a purple background

VHI’s mortgage protection offering comes with many features included and a 10% discount for customers already with VHI.

VHI mortgage protection features:

  • Guaranteed insurability
  • Terminal illness benefit
  • Accidental Death benefit of up to €250,000
  • Waiver of premium
  • Reinstatement clause

Available add-ons:

  • None

VHI reviews

There are not enough reviews available for VHI mortgage life insurance to give a balanced review. Comments left pertain to their other insurance products, namely their healthcare plans.

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