Why do I need Mortgage Protection?
If you are borrowing money from a bank and it is secured by your home, you must have a life assurance policy in place to cover the outstanding balance, in case you die before the mortgage has been repaid.
There are certain circumstances under which the need for cover may be waived but generally, it is both a legal, and, if you have financial dependents, a moral requirement to have cover.
What is Mortgage Protection?
Mortgage Protection is a life assurance policy also known as Decreasing Term Assurance. It is a policy designed to clear your outstanding mortgage in the event of your death. The policy assumes an interest rate of 6% and reduces each year broadly in line with the amount outstanding on your mortgage. Because of this, it is cheaper than other forms of life assurance.
If you have an interest-only mortgage, a level term assurance policy, where the sum assured remains level for the entire term, will be more appropriate.
How much Protection do I require?
The sum assured and length of cover must be at least equal to the value and remaining duration of your mortgage.
What does it Cover?
The most basic cover is a simple life assurance policy, and this would be accepted by all banks. However. you can opt to include specified illness cover, which will pay out a lump sum on diagnosis of an insured illness, such as, for example, cancer, heart attack or stroke. The specified illness sum insured can represent some, or all of the outstanding mortgage amount and the benefit will be assigned to the bank.
You can also put an income protection policy in place to cover your monthly mortgage repayments in the event you are unable to work for an extended period of time as a result of illness or injury.
Why should I choose MoneyCoach?
MoneyCoach is the financial planning division of Irish Mortgage Corporation. We understand the mortgage process and know what needs to be done and when.
We have access to all the providers in the Irish market and can identify the most competitive price for your cover. Having selected the most competitive price, we will manage the application process on your behalf to ensure that there are no delays in obtaining cover.
When should I start the Mortgage Protection application?
Once you have identified a property to purchase and obtained mortgage approval, you should submit your Mortgage Protection application. Arranging cover early in the process is helpful in case there are any medical queries that need to be attended to and to avoid any unforeseeable delays.
How long does it take to put in place?
Processing your application normally takes 3 -5 working days from the day we receive it. However, it could take up to 3-4 weeks, if you have ongoing health issues or a medical history which requires further information or independent tests.
When should my Mortgage Protection policy start?
It is recommended that you consider putting your life policy in force as soon as contracts are signed to ensure that should you die, your legal obligation to complete the purchase of the property can be met. If the purchase is not completed, you or your estate will face losing your deposit and it is possible that any surviving partner may not be able to secure the same level of finance in the future
Does my premium remain fixed?
The price of all term assurance policies remains fixed for the full policy term, unless you have selected inflation protection on your level term policy.
Do I need Mortgage Protection on my Investment Property?
No, it is typically not a strict requirement of your residential investment mortgage to have a life policy. However, we strongly recommended that you put a policy in place.
If your investment property is to be rented out, it is possible that the cost of a life policy protecting the mortgage can be offset against the rental income.