Mortgage protection insurance

What you need to know about mortgage protection insurance

Mortgage protection insurance pays off your mortgage if you or another policyholder die during the mortgage term. It is required by law when taking out a mortgage in Ireland unless you cannot get cover due to age or health. If you do not have cover, you are financially responsible for the mortgage if a policyholder dies.

This page explains the different types of mortgage protection available, how lender group schemes work, what to check when switching or topping up your mortgage and how to make a claim.

Refused a mortgage

If you are refused a mortgage because you cannot get mortgage protection due to age or health, you can raise it with the Central Bank of Ireland (CBI) for regulatory concerns or make a complaint to the Financial Services and Pensions Ombudsman (FSPO) if you believe the lender treated you unfairly.

Mortgage protection and cancer survivors: new code of practice explained

Since 6 December 2023, insurers that follow Insurance Ireland’s Code of Practice must ignore a past cancer diagnosis if treatment ended over 7 years ago (or 5 years for under-18s). Insurance Ireland is the representative body for the Irish insurance industry, not a regulator. For more, go to Gov.ie. 

Where can you buy mortgage protection insurance?

• From an insurance company
• Through a broker
• From your lender, as part of a lender’s group scheme. 

What is a lender’s group scheme?

• The lender arranges a group mortgage protection policy with an insurance provider. 
• You are added to this group policy when you accept their offer. 
• The policy is owned by the lender, not by you. 
• It typically only covers the mortgage and ends when the mortgage is paid off. 
• You cannot transfer this policy to another lender if you switch mortgages.

What are the different types of mortgage protection insurance?

There are a few different types of mortgage protection insurance. These include:

• Reducing term cover: The amount covered reduces as you pay off your mortgage. This is the most common and cheapest type.
• Level term policy: The amount insured and your premium stay the same. If you die before the mortgage is paid off, the insurer pays the original insured amount. Any balance left after clearing the mortgage goes to your estate.
• Serious illness cover: You can add this to your policy, so your mortgage will be cleared if you die or if you’re diagnosed with a serious illness covered by your policy.
• Life insurance policy: You can use an existing life insurance policy if it is not already assigned to another loan and provides enough cover. Any balance left after clearing the mortgage goes to your estate.

What happens to your policy if you change your mortgage?

If you change your mortgage, there are several things to consider, depending on whether you are topping up or extending your mortgage, switching or paying the mortgage off early.

Topping up your mortgage

• Make sure your policy covers the new mortgage amount.
• You can get a new policy for the total amount or just for the top-up.
• Compare costs and benefits – sometimes it is cheaper to keep your original policy and buy a second one for the top-up.

Your premium may be higher if you are older, as age affects your premium.

Switching your mortgage

You can assign your mortgage protection to the new lender if the amount and term do not change. If you have a policy as part of a lender’s group scheme with your lender, it will be cancelled when you switch. Make sure you can get new cover before switching, as it may cost more or be unavailable if you are not in good health.

Paying off your mortgage early

• You can cancel your mortgage protection cover and stop paying.
• Or you can keep the policy and continue paying until the original end date – this may be useful if your policy covers more than just your mortgage, for example life insurance or level term cover.
• If you have a group policy, your lender may close it when you clear your mortgage and give you no option to keep the policy open.

How do you make a claim?

There are a few steps you should follow to make a claim:

1. Contact your insurer or broker. Notify them that a policyholder is deceased.
2. Complete a claim form. Fill it in as accurately as possible to avoid delays or refusal of your claim. If you are unsure of any information requested on the form, ask your insurer or broker.
3. Get your paperwork in order. You may need to provide the original policy document and certified copies of the death certificate.

If you have a serious illness policy with your mortgage protection insurance, you can claim if you’re diagnosed with a serious illness covered by your policy.