January is a month for minding money, one common practice is over paying on financial products. Today we will look at some financial protection products. Many mortgage holders are paying over the odds for mortgage protection — often because they just took whatever policy was offered by their lender.
Let us start with the basics – what is mortgage protection?
Mortgage protection is a type of life insurance that pays off your mortgage if you die or become ill. It is usually required by lenders when you take out a mortgage, except in some cases, such as if you are over 50 or already have enough life cover. In Ireland, there are different types of mortgage protection policies available, such as single, joint or dual.
• A dual policy pays twice the amount of the mortgage if both partners die,
• While a single or joint policy only pays once.
You can compare the rates and benefits of different providers and choose the one that suits your needs and budget. Mortgage protection can give you peace of mind that your home will be secure for your family in case something happens to you.
It also protects your lender from losing money if you default on your loan. There are different types of mortgage protection available, depending on your needs and preferences. The most common type is a decreasing term policy, which means that the amount of cover reduces over time as you pay off your mortgage. This type of policy is usually cheaper than a level term policy, which keeps the same amount of cover throughout the term. You can also choose a dual policy, which pays out twice if both you and your partner die, or a convertible policy, which allows you to extend or change your cover at the end of the term.
Mortgage protection policies vary in price and benefits, so it is important to shop around and compare quotes from different providers. You do not have to buy the policy offered by your lender, and you may find a better deal elsewhere. You should also review your policy regularly and make sure it matches your current mortgage and personal circumstances. You can switch your policy at any time if you find a cheaper or more suitable option.
Mortgage protection is not the same as mortgage repayment protection, which covers your monthly repayments for a short period of time if you lose your income due to illness, injury or redundancy. Mortgage repayment protection is optional and usually more expensive than mortgage protection. You may want to consider both types of insurance if you want to protect yourself from any financial difficulties that may affect your ability to pay your mortgage.
But how do you know if you are getting the best deal on your mortgage protection policy?
Here are some tips to help you avoid overpaying for mortgage protection in Ireland.
– Shop around: Different insurers may offer different prices and benefits for the same level of cover. You can compare quotes from different providers online or use a broker to help you find the best deal. Don’t just accept the first offer you get from your bank or lender, as they may charge you more than other insurers.
– Review your cover regularly: Your mortgage protection needs may change over time, depending on your mortgage balance, interest rate, term and personal circumstances. You should review your cover at least once a year and see if you can get a better deal elsewhere. You may be able to switch to a cheaper policy without losing any benefits or having to undergo medical underwriting again.
– Choose the right type of cover: There are different types of mortgage protection policies available, such as level term, decreasing term and convertible term.
– Check for discounts and extras: Some insurers may offer discounts or extras that can lower your premium or enhance your cover. For example, you may get a discount if you buy joint cover with your partner, if you are a non-smoker, or if you have other policies with the same insurer. You may also get extras such as terminal illness benefit, indexation, waiver of premium or free children’s cover. Make sure you check what is included in your policy and what is not before you buy.
– Ask for advice: If you are unsure about how much cover you need, what type of policy to choose, or how to compare quotes, you can ask for advice from a qualified financial adviser. They can help you assess your needs, explain the features and benefits of different policies, and recommend the best option for you.
What is the difference between mortgage protection and life insurance?
Mortgage protection and life insurance are both types of cover that pay out a lump sum if you die or become seriously ill. However, they have different purposes and features. Mortgage protection is designed to clear your mortgage debt, while life insurance is meant to provide financial support for your dependants.
Mortgage protection is usually a legal requirement in Ireland when you take out a mortgage, unless you meet certain exceptions. It is a decreasing term policy, which means that the amount of cover reduces over time as you pay off your mortgage. The term of the policy matches the term of your mortgage, and the policy ends when your mortgage is paid off. Mortgage protection is usually cheaper than life insurance, because the risk of death or illness decreases as you get older. Life insurance is not a legal requirement, but it may be a good idea if you have dependants who rely on your income. It is a level term policy, which means that the amount of cover stays the same throughout the term. The term of the policy can be chosen by you, and it can be longer or shorter than your mortgage term. The policy does not end when your mortgage is paid off, and it can be used for any purpose, such as paying off other debts, covering funeral costs, or leaving an inheritance.
Mortgage protection and life insurance can be bought separately or together, depending on your needs and preferences. You can also choose different types of policies, such as dual, convertible, or whole-of-life policies, which offer different benefits and options.
You should compare quotes from different providers and review your policies regularly to make sure they suit your current situation. Like all financial advice, everyone’s situation is difference so one solution does not fit all.
Contact Carey Corbett Financial Solutions today for an appointment on 065-6893540
Andrew Hamilton is a journalist, investigative reporter and blogger who has been working in the media in Ireland for the past 20 years. His areas of special interest include the environment, mental health and politics.