What is mortgage protection?
When you're taking out your mortgage, your lender will usually request that you also take out a mortgage protection policy. But what is it? It's a cheaper form of life cover, designed to help pay your outstanding mortgage balance if the worst were to happen. So you know your family can keep the home they love.
How does mortgage protection work?
When you take out a mortgage, your provider will insist you have enough cover in place to repay it if you die within the term of your mortgage. This is a basic type of life insurance cover. However, to give you further protection, you can combine your life cover plan with serious illness cover. This gives you protection for a number of serious illnesses.
When you take out a Mortgage Protection plan, you’ll pay a premium each month for the length of your mortgage term.
Your mortgage protection plan helps pays off your mortgage if you die before the end of the term. As it’s designed to work with your mortgage, the amount of cover reduces over time as you pay off your mortgage.
As you would expect, because your cover decreases over the term, this type of life insurance is usually cheaper than cover which stays at the full amount throughout the term of the policy.
The cost of your Mortgage Protection cover will depend on:
- the size of your mortgage - this determines the amount of cover you need
- whether you add a conversion option
- whether you add specified illness cover
- the length of your mortgage – this determines the term of your plan
- your age
- whether you are a smoker or non-smoker
- your current state of health
- whether you take out the plan by yourself or jointly with your partner
You can get even more peace of mind by adding specified illness cover to your mortgage protection policy. This means that if you are diagnosed and proven to have a specified illness or if you die, your benefit will be paid. About specified illness cover.
The difference between Life Insurance and Mortgage Protection
Siocha Costello, Protection Marketing Manager, Aviva Life & Pensions Ireland DAC explains the difference between Life Insurance and Mortgage Protection.
00:00:00 Video starts
00:00:05 Siocha Costello, one minute pitch. The difference between Life Insurance and Mortgage Protection, your time starts now.
What is Life Insurance?
00:00:14 Siocha Costello, Protection Marketing Manager, Aviva Life & Pensions Limited
In a nutshell life insurance will pay your dependents a lump sum if you die.
What is Mortgage Protection?
00:00:22 Siocha Costello
Mortgage protection pays out the outstanding balance of your mortgage if you die.
So, what is the main difference between the two?
00:00:27 Siocha Costello
The money from you mortgage protection goes to your lender to pay off your mortgage so your family home is secure. Life insurance gives your family money for all their other expenses, childcare costs, electricity costs and loans.
Why would you need both?
00:00:42 Siocha Costello
If you are taking out a mortgage you are required to have mortgage protection in place, having both means having all your family financial outgoings are taking care off.
When is a good time to get cover?
00:00:54 Siocha Costello
Insurance costs are generally based on several factors. One of those is age so the younger you are generally the cheaper it is.
What do you think is the best thing about these products?
00:01:06 Siocha Costello
I think the peace of mind that comes will knowing that your family is financially secure if anything happened to you.
Siocha your time is up.
To find out more about Life Insurance and Mortgage Protection talk to your Financial Broker.
00:01:23 Video ends
With your protection policy you have access to the following services through our Aviva Care benefit:
Why choose us for mortgage protection?
Aviva has been providing trusted protection in Ireland for over 240 years. We’re part of the Aviva Group, providing 18.5 million customers* in the UK, Ireland and Canada with a range of solutions to meet their insurance, wealth and retirement needs. We’re there to protect the things that matter most to our customers: their homes and belongings, their health and wealth, their future and their families.
*Source: Aviva plc Annual Report & Accounts 2022.
The documents below contain everything else you might need to know:
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Specified illness cover
1. Acceptance criteria, terms and conditions apply. These monthly premiums are based on single life cover of €170,000 for a person aged 31 next birthday and a non-smoker, over a 25 year term, total amount €10.03. Source: Aviva Life & Pensions Ireland DAC as at February 2023.
2. Source: Aviva & Pensions Ireland DAC. Claims information is based on the period 1st January to 31st December 2022.
3. This is available for policies up to a maximum sum assured of €1,000,000. Where applicable, any additional forms required for medical evidence will require a signature. Aviva reserve the right to request a signed application at any stage prior to policy issue.
4. This cover kicks in from the moment you send us a fully completed and signed application form and direct debit mandate. You get cover for accidental death up until we accept or decline your application. We will pay out the lower of the life cover amount being applied for and €150,000. We will only pay once under this benefit in respect of any life insured regardless of the number of life cover policies or applications for life cover a person has with Aviva.
Aviva Life & Pensions Ireland does not guarantee the on-going availability of any or all of the Aviva Care Ireland services to its policyholders and may, at its sole discretion, withdraw access to the service at a month’s notice. If we withdraw it, we’ll write to notify policyholders at least 30 days in advance of its removal.
Teladoc Health (who provide the Aviva Care services) is not a regulated financial service.
Aviva Direct Ireland Limited is regulated by the Central Bank of Ireland. A private company limited by shares. Registered in Ireland No 374895. Registered Office: Cherrywood Business Park, Dublin, Ireland, D18 W2P5.
Life and Protection Cover is underwritten by Aviva Life & Pensions Ireland DAC.
Aviva Life & Pensions Ireland Designated Activity Company, a private company limited by shares. Registered in Ireland No. 165970. Registered office at Building 12, Cherrywood Business Park, Loughlinstown, Co. Dublin, D18 W2P5. Aviva Life & Pensions Ireland Designated Activity Company, trading as Aviva Life & Pensions Ireland and Friends First, is regulated by the Central Bank of Ireland. Tel (01) 898 7950.