Life insurance vs. mortgage protection

So, one of the questions we always get
asked at is to explain the difference between mortgage protection
and life insurance. So we decided to ask our General Manager of Protection,
Stephen Kelly. Life insurance pays out a tax-free lump sum if you should die during the term of the policy. It’s possible to have single life cover where
only one person is insured on the policy or joint life or dual life cover where
two people are insured on one policy. Life insurance can give you peace of
mind that your family will be financially secure if the worst should
happen. So let’s say you take out a level life insurance policy of €300,000
over 30 years. If you died at any time during the 30-year term of the policy a
tax-free lump sum of €300,000 will be paid out your estate – it’s that simple. mortgage protection is a type of life
insurance that will pay off the balance of your outstanding mortgage if you were
to pass away during the term of your loan. So, the cover that you’re insured for
actually reduces each year in line with your mortgage. For this reason it’s
a cheaper form of cover than life insurance. So, mortgage protection is compulsory in
Ireland if you want to draw down your mortgage and move into your home you’re
going to need to take out mortgage protection. So, if you’re looking for a
mortgage, it’s important to apply early in the process so that your loan
drawdown isn’t delayed. Absolutely not – you’re free to shop around
with all of the providers and, in doing so, make sure you
get the best price. Unless you qualify for a waiver, you will
have to take out mortgage protection. Whether you need life cover as well
will depend on your situation. For example, you may need
extra cover if you have family or dependents who are reliant upon your
income. If you have a young family, you may need more cover because the
benefit will have to last for longer. On the other hand, you may not need any cover if
you have no dependents or children who rely on your income. Before taking out
life insurance it’s always important to speak with a qualified financial advisor,
who will complete a full financial review and help
with your decision. So, there it is, we hope that helped
explain to you the difference between mortgage
protection and life insurance. And remember, if you are looking for cover,
just head over to right now, where you
can get started!

Paul Whisler


  1. One suggestion:
    Could you read out the questions as well as putting them on screen. This helps for people with visual impairment, reading difficulties or just people who have stepped away from the screen or are just listening without watching.

    I was multi-tasking, listening to the video but not watching and found it very confusing

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