Mortgage Protection and Mortgage Repayment Protection

I find great confusion amongst the public about Mortgage protection insurance and mortgage repayment Protection. When dealing with my customers I am often asked does my mortgage protection cover repay my monthly loan repayment? So here’s a brief explanation of both:
Mortgage protection Insurance: This is a life insurance policy taken out by an individual or a couple to repay their mortgage balance in full during the term of the mortgage loan. This form of insurance is compulsory for all Irish citizens under age 50 when borrowing a mortgage. The life insurance policy is assigned to the home loan lender for the duration of the loan. The policy pays the benefit on the first death notified to the company. Please note that most people’s policies will be paid in full once the interest rate on their mortgage is not in excess of 6% p.a. at date of death! So watch out for that.

Mortgage repayment Protection: This form of insurance usually available from your home loan lender directly will repay your monthly repayment if you cannot work due to illness, accidental injury or involuntary redundancy. The cover commences after 1 months abscence from work and in most cased pay your monthly mortgage repayment for 1 year. It is not a compulsory purchase and is totally up to the individual or couple concerned. This protection was usually possible to purchase at the time you applied for your mortgage. During the latter stages of the Celtic tiger, however it was possible to purhase after the fact, i.e. after your mortgage was borrowed. Needless to say now that the downturn has happened the insurer has withdrawn from issuing new policies! The most valuable cover in these policies was mortgage repayment due to involuntary redundancy and since this is now a big reality for a lot of people it is not possible to write this cover in such a market.
I am glad to say however it is still possible to protect your mortgage repayment if you loose your job due to illness and accidenatal injury. This is available if you are employed or self employed.

Should you wish to check your mortgage protection premium cost and get the most up to date quotation please go to get a free quotation on the online FREE Quotes System