Getting everything in shape
A Guide to Mortgage Protection Cover
Table of Contents
Your Introduction to Mortgage Protection
Security when you need it
We all value our home as a place to relax, a sanctuary from day‑to‑day life, a base for our families, and a home for our children. It’s a place that often holds many memories. And, quite often, it’s something we leave to our children – as an investment in their future. Like many people, your mortgage is probably your most considerable financial responsibility. Of course, there’s always a worry that should you die or become seriously ill, your family may have difficulty meeting this significant liability.
Mortgage Protection is a simple, cost‑effective way for you to insure your life and give you the peace of mind of knowing that if you were to die within the term of the policy, your mortgage protection policy will provide a lump sum to go towards paying off your outstanding mortgage.
With Mortgage Protection you can choose Life Cover only or Life Cover with Accelerated Specified Serious Illness Cover.
Life Cover provides a lump sum if you die within the term of your policy.
Specified Serious Illness Cover provides a lump sum if you suffer from one of the specified serious illnesses covered within the terms of your policy.
The level of cover you select reduces each month in line with a repayment mortgage of the same amount, based on the interest rate you have chosen at the outset of the policy. The fact that the cover reduces over the term you select means that this type of policy is one of the most cost‑effective ways for you to insure your life.
Security for your family
Of course, the thought of dying is not something that anyone likes to dwell on, but by putting in place a Mortgage Protection policy with sufficient cover for your mortgage, you can have the peace of mind that comes with knowing that you’re helping to protect your family’s financial future.
In summary, if you’re looking for a Life Insurance policy that offers you financial security at a competitive price, then a Mortgage Protection policy could be the one for you.
It offers you:
• Straightforward, no‑nonsense Life Cover
• A guaranteed lump sum, payable if you die within the term of the policy
• A genuinely competitive cost‑effective premium
• A guarantee that your premium will not change throughout the term of your policy (although any relevant Government levies will be reflected in your payments
How Mortgage Protection works
The amount of your outstanding mortgage reduces as you make your repayments. Mortgage Protection is designed so that the level of cover you select reduces monthly in line with the amount of capital outstanding under a mortgage of the same amount, based on the interest rate you have chosen at the outset of the policy.
You can select whether you want your cover to reduce in line with a mortgage at an interest rate of 6%, 9%, or 13%. The 13% interest rate option is not available if you choose to add Specified Serious Illness Cover to your policy.
The following table shows how the level of cover reduces over the term of your policy depending on the interest rate you select. The example is based upon initial cover of €200,000 for 30 years.
| Term outstanding (years) | Remaining Cover at 6% interest rate | Remaining Cover at 9% interest rate |
| 30 | €200,000 | €200,000 |
| 25 | €185,739 | €191,219 |
| 20 | €166,655 | €177,708 |
| 15 | €141,117 | €156,920 |
| 10 | €106,940 | €124,934 |
| 5 | €61,205 | €75,721 |
The mortgage outstanding and hence the cover remaining, is higher throughout the term of the policy if the 9% interest rate is chosen rather than the 6% interest rate. The fact that the cover is higher for the 9% interest rate also means that the premium is higher for the 9% interest rate than the 6% interest rate.
In most cases, your policy will be assigned to your lender, and should you die the policy proceeds will be paid directly to them. If the policy is not assigned to your lender, in the event of a death claim the policy proceeds will be paid to your representatives.
Of course, if your circumstances change and you no longer need your Mortgage Protection policy you can contact your Financial Broker to discuss your options.
Please note: If you take out cover for the same amount as your mortgage, but your mortgage interest rate is on average higher than the interest rate you choose for your Mortgage Protection policy, then your cover will not be sufficient to fully repay your outstanding mortgage if you make a claim.
This may also be the case if you modify any of the terms of your mortgage, or if any mortgage repayments are not made when they fall due.
Did you know?
If you pay off your mortgage earlier than expected, you can keep your policy going as a separate Life Assurance policy.
Benefits included with Mortgage Protection
You’ll receive a number of additional benefits with your Term Assurance policy:
Special Events Increase Benefit
Special Events Increase Benefit This is also known as a ‘Guaranteed Insurability Option’. This benefit provides the option to increase the level of Life Cover (if any applies) and/or Specified Serious Illness Cover (if any applies), without providing further medical evidence, following any of these events:
Increase in your mortgage, either to purchase a new main residence or for home improvement of your main residence
• Marriage
• Birth or adoption of a child
Full details of these Benefits and the Terms and Conditions which apply are contained in the relevant Policy Conditions booklet.
The maximum increase you can make following any one of these events is the lower of €100,000 and 50% of the original level of cover for that benefit. The maximum total increase you can make for all events over the policy term is the lower of €200,000 and the original level of cover for that benefit.
Your premium will be adjusted accordingly. Any increase in Accelerated Specified Serious Illness Cover must be matched by the same increase in Life Cover.
However, should you choose to, you are able to increase the level of Life Cover only. This option ends when you reach age 55, or when the older person reaches age 55 for a Joint Life policy.
Please note, that the availability of this option is subject to underwriting at the time the original policy is taken out.
Terminal Illness Benefit (Prepayment of Life Cover)
It’s not a pleasant thought to ponder of course, but in the event that you are diagnosed with a terminal illness and have less than 12 months to live, the full amount of Life Cover will be paid as of the date of diagnosis.
A terminal illness is an illness where, in the opinion of the attending Consultant and Life Company’s Chief Medical Officer, you will not survive the next 12 months.
Specified Serious Illness Cover
Have you considered how you would continue to pay your mortgage should you suffer a serious illness? It’s not a thought any of us like to dwell on, but the unfortunate reality is that it could happen to any of us at any time.
What is Specified Serious Illness Cover?
If you choose to add Specified Serious Illness Cover to your Mortgage Protection policy it can provide additional security to you and your family by paying a guaranteed lump sum to help repay your mortgage, if you are diagnosed as suffering from one of the 60 specified serious illnesses covered, during the term of your policy. You will also be covered under our Partial Payment Specified Serious Illness Cover for an additional 40 specified illnesses.
But what are the chances of suffering a serious illness?
The chances of suffering a serious illness may be much higher than you think.
Did you know?
In Ireland 1 in 3 men will get cancer by age 75. • In Ireland 1 in 4 women will get cancer by age 75. • Five-year average net survival of Irish cancer patients for the diagnosis period 2014–2018 is 65%. • Approximately 7,500 people suffer a stroke in Ireland annually.
Sources: National Cancer Registry of Ireland (2021) Cancer in Ireland 1994-2019: Annual Report of the National Cancer Registry; Irish Heart Foundation 2022.
Who is covered?
You may cover your own life only: ‘Single Life Cover’, or you may take out a policy on two lives: on either a ‘Joint Life Cover’ or a ‘Dual Life Cover’ basis. The choice is yours.
Joint-life Cover
‘Joint Life Cover’ provides cover for 2 people, for example, yourself and your spouse, who are both insured for the same amount. Where cover is on a Joint Life basis, a claim for one of the lives will reduce the overall level of cover provided by the policy, by the amount of the claim.
For example, Tom and Mary have a Joint Life policy for €200,000 Life Cover and €150,000 Specified Serious Illness Cover. 10 years after taking out the policy, Tom unfortunately suffers a heart attack (which satisfies our Policy Conditions), and the policy pays out €124,992 Specified Serious Illness Cover policy proceeds.
As the policy was set up on a Joint Life basis there is now, following the Specified Serious Illness claim, just €41,663 Life Cover remaining for either Tom or Mary.
Dual Life Cover
Alternatively, the cover can be arranged on what is known as a ‘Dual Life’ basis. Where cover is on a Dual Life basis, cover is provided separately for the two lives.
As the two lives are covered independently, a claim for one of the lives has no impact on the levels of cover relating to the other life.
Dual Life Cover is available for Life Cover only and is not available for Mortgage Protection policies with Specified Serious Illness included.
The illnesses covered by Specified Serious Illness Cover:
If you are thinking about taking out serious illness insurance, it is important to realise that it would not replace your income if you were out of work due to long-term illness.
Serious illness insurance will only pay out if the illness is covered by the policy. Many illnesses that would prevent you from working may not be covered by your policy. Even when the illness is covered, the policy pays a once-off lump sum and not an ongoing income.
Not all policies will cover the same illnesses, or common illnesses, such as angina, back injury, and treatable cancers. You should check with your insurer or broker for details of the illnesses covered before you take out a policy.
The list of illnesses varies between insurers but usually includes:
- stroke
- heart attack
- some types of cancer
- coronary artery disease
- multiple sclerosis
- kidney failure
- motor neuron disease
- blindness
- major organ transplantation (including being on a waiting list for transplantation)
- a benign brain tumour
- severe burns
Benefits included with Specified Serious Illness Cover
Partial payments
If Specified Serious Illness Cover is included as part of your policy, as well as the 60 specified serious illnesses covered, this benefit provides a partial payment if you are diagnosed with one of 40 additional specified illnesses.
All of the Life companies include partial payments. We will guide you through the illnesses covered by each provider once chosen as the preferred policy.
Important Note: the conditions listed above are not representative of all providers but are included as a general guide only. For more accurate listings please read the policy conditions of the specific policy implemented and refer to the provider’s terms and conditions.
Children’s Specified Serious Illness Cover
If Specified Serious Illness Cover is included as part of your policy, this benefit provides cover for your children. All of your children, from birth until their 18th birthday (21st birthday if in full‑time education), are covered during the term of the policy.
The cover is 50% of your Specified Serious Illness Cover at the date of diagnosis, up to a maximum of €25,000. In addition, your children are also covered for one partial payment of 50% of your Specified Serious Illness Cover at the date of diagnosis, up to a maximum of €7,500.
For a Children’s Specified Serious Illness Cover benefit to be paid, the child must survive the specified serious illness for a period of at least 10 days after diagnosis. Pre‑existing medical conditions are excluded.
A Children’s Specified Serious Illness claim will not be paid for:
• Loss of Independent Existence;
• Brain Injury due to anoxia or hypoxia, before the age of 90 days;
• Intensive Care requiring mechanical ventilation for 10 consecutive days, before the age of 90 days;
• Diabetes Mellitus Type 1; or,
• Severe Mental Illness ‑ of specified severity.
Donor Recipient Cover
If Specified Serious Illness Cover is included as part of your policy, this benefit will provide cover in the event that you donate a living organ to a family member. €2,500 will be paid to the family member who has received the living organ as a one‑off cash lump sum if you donate one of the following:
Pre‑existing conditions, stem cells, islet cells, and any other organ or tissue donations are excluded.
Advance Payment of Benefit for Heart Surgery
If Specified Serious Illness Cover is included as part of your policy, we will pay up to €20,000 of that cover immediately should you be diagnosed as needing any of the following surgeries and have given us the evidence we need about the condition:
• Aorta Graft Surgery
• Coronary Artery Bypass Graft Surgery
• Pulmonary Artery Surgery
• Heart Valve Replacement or Repair
The amount paid will be deducted from any remaining Specified Serious Illness Cover which will be paid after the surgery has taken place (provided you survive for a period of 10 days after the surgery if the Specified Serious Illness Cover is on a stand-alone basis).
If the Specified Serious Illness Cover is on an Accelerated basis, once an advance payment has been made, your Life Cover will also be reduced by the same amount.
Additional options
Conversion Option
By selecting to include a Conversion Option on your policy you obtain a benefit that gives you the option to convert your cover into another policy, without having to provide evidence of health.
A Conversion Option is available on Mortgage Protection policies for Life Cover only and is not available on policies with Specified Serious Illness cover. You pay a slightly higher premium should you wish to include the Conversion Option in your policy, and the option can be used at any time during the policy term up to your 70th birthday (or before the 70th birthday of the older life for Joint Life or Dual Life policies).
The premium rates in place at the time of conversion, appropriate to your age at that time, will apply. Any special conditions, exclusions, or ratings that applied to the original policy will also apply to the new policy.
How do I make a claim on a Mortgage Protection policy?
Firstly, your policy must be in force with all premiums paid at the time of the claim. The person making the claim will need to request a claim form from their Financial Broker or from the Life Company’s office. Once completed the person making the claim should return the form along with the items listed here:
Original Registrar’s Death Certificate
• Life Assured’s original Birth Certificate
• Original Marriage Certificate – if the Life Assured is a married woman and her surname now differs from the surname on her Birth Certificate
• A Grant of Probate or Letters of Administration.
If the policy is assigned to a Bank or Building Society, the original Deed of Assignment from the lending institution will be required.
It is important to note that the benefits will be paid to the assignee unless the Life Company are given written instructions from the assignee to pay the policy owner directly
Specified Serious Illness Cover Claims Checklist
Completed Claim Form – signed and dated
• Original Birth Certificate
• Original Marriage Certificate – if the Life Assured making the claim is a married woman and her surname now differs from the surname on her Birth Certificate
• If your policy is assigned, the original Deed of Assignment from your bank or building society
Following receipt of the completed claim form, we will write to your General Practitioner and the Specialist who diagnosed the serious illness. In some circumstances, you may be asked to undergo an independent medical examination or further tests to confirm the diagnosis. When these medical reports are received, your claim is processed in the Claims Department by Claims Assessors and the Chief Medical Officer.
Payment of a Claim
If your claim is valid and we are in receipt of all of the relevant documentation we will issue payment of the claim amount.
Although the vast majority of claims are paid, some claims may be declined and the benefit not paid or paid only in part. Some of the most common reasons for declining a claim are misrepresentation within the application, illnesses that don’t meet the policy definition, illnesses that are not covered by the policy, or if the exclusions under the policy prohibit payment of benefits.
If a claim is denied, or not paid in full, the Life Company will write to you to explain the reasons why.
Are there any tax implications for making a claim?
Under current Irish law and if your claim is successful, tax, in most cases, does not have to be paid on Life Cover or Specified Serious Illness Cover benefits.
However, in some circumstances, tax may have to be paid. For example, if a Life Cover benefit is paid to your estate, your beneficiaries may incur an Inheritance Tax Liability on the proceeds of the plan.
Mortgage Protection FAQ’s
Frequently Asked Questions?
Is mortgage protection insurance compulsory in Ireland?
In Ireland, Mortgage Protection Insurance is generally required for all individuals taking out a home mortgage if they are 50 years old or less. However, mortgage protection may be waived at the discretion of the lender where an applicant is over age 50 and can prove that they were unable to secure cover from at least 3 providers.
Do I need a medical for mortgage protection insurance?
To apply for mortgage protection, the first thing you must do is fill in an application form. You answer some health questions. The life insurance company will accept the vast majority of applicants based on the application form alone. But if you have suffered any health issues, you may have to complete a questionnaire, provide additional information, or complete a medical examination.
What’s the difference between mortgage protection and life insurance?
Mortgage protection is a type of life insurance that’s there to pay the mortgage provider (usually the bank) back the mortgage amount if you die. Whereas when someone refers to simply “life insurance”, they’re generally referring to the type that provides your family with a lump sum if you die.
Can I change my mortgage protection provider?
Yes, If you’re switching mortgages and you bought your Mortgage Protection from a broker, you’re free to take that policy to your new lender. However, if you bought a block policy from your bank, they will cancel that policy, so you need a new Mortgage Protection policy.
Why use a broker for mortgage protection?
Your Financial Broker can get you the best quality cover at the most competitive cost. Remember, you are not obliged to deal with the bank that gives you the loan. In fact, it is illegal for a bank to offer you a mortgage on condition you complete insurance with them.
Useful Contacts
