How to Compare Mortgage Protection Policies
Humans are lazy.
And I’m not just saying that as a broad statement.
We’re hardwired to conserve our energy when making life choices. And yes, you’re included in that Mr “I get up every morning at 5 am to do CrossFit for an hour before work’.
It’s science, with the results published in a real-life science-y report called:
“Perceptual decisions are biased by the cost to act.”
In actual English, the study found that the amount of effort required to do something influences what we think we see. Or, if we believe there’s too much work involved, we’ll go for the easiest route and tell ourselves that it’s the right one.
Because we’re lazy.
That’s why, when you get a quote for Mortgage Protection (or any type of insurance), it’s reasonable to pick the cheapest insurance and not think about it ever again. But that’s not necessarily the wisest choice, young grasshopper.
Or you could have just breezed through the last three sentences because of the big words – and convinced yourself it wasn’t really that important.
How to choose a Mortgage Protection policy in the Irish market
A quick refresher in case you need it: mortgage protection is the type of insurance you need when you’re buying a house. It pays off your mortgage if you die.
Now, let’s start with an example to help make this real.
Jesse is 34 and buying a house with his partner. Jesse really likes CrossFit, because who doesn’t (amirite)?
His mortgage is €350,000, and he wants to pay monthly for the 30-year term of his mortgage.
Jesse doesn’t smoke (his body is a temple; I don’t know if you heard, if you haven’t, he’ll tell you soon, but he does CrossFit) and neither does his partner (they’d love to smoke but because Jesse does CrossFit – there’d be murders over smoking).
So does Jake take the path of least resistance and become a Zurich Lifer?
The crucial thing to remember is that you’re not just paying for Mortgage Protection. There’s also a bunch of other stuff included. So let’s look at what the various insurers are offering for your hard-earned.
Pro-tip: you can see all this information yourself when you get a quote – simply scroll down to the comparison charts.
1. Zurich Life
Cost: Joint lowest premium: +1 for Zurich. They also also offer:
Up to 6 weeks free if we work our magic. 🎩
Free waiver of premium. (If you can’t work due to illness or accident for more than 13 weeks, Zurich will cover your payments). This is exclusive to Zurich Life.
Dual life mortgage protection – you’ll pay a teeny bit extra.
The conversion option is available.
Guaranteed insurability up to €100,000. If you get a new, bigger mortgage, you could get an extra €100,000 cover without answering medical questions. Handy!
The joint-best Serious Illness Cover in Ireland (if you want to bundle it with your Mortgage Protection). But spoiler alert: DON’T. Because if you claim SIC on your MP, the spondoolies go to your bank. Which: 🤢.
90-day reinstatement clause. This kicks in if you missed payments. Your policy would be suspended, but you’d have 90 days to pay it back and be covered again even if the policyholder got sick or died in the interim.
Accidental Death Benefit. You’re covered for up to €150k as soon as Zurich receive your application. This cover lasts for 30 days or until Zurich accept/decline your application.
2. Royal London
Cost: Joint Cheapest: +1 for Royal London. They also do:
The first month free. Sound.
Dual life mortgage protection for the same price as joint life cover
You can make your policy convertible for an extra 5% in premiums
The Helping Hand benefit – free services for things like physiotherapy, bereavement counselling, and second medical opinions.
Free Child Life Cover. Not to be sniffed at.
Decent Serious Illness Cover. But again: negligible because you shouldn’t do it. If you want serious illness cover, buy it on a life insurance policy for your own protection.
100-day reinstatement (even better than Zurich’s)
Cost: Middle of the pack, so 🤷. You also get:
Best Doctors Second Opinion. A second opinion, for free, if you want one.
Here at Lion HQ, we have senior underwriters at Aviva on speed dial – these guys are excellent for clients with health issues.
Accidental Death Benefit.
Cost: A hair more expensive. Hardly a deal-breaker. Also on offer:
Conversion option – but at an extra cost. This is good, as it lets you renew your policy if it runs out before you’ve paid off your mortgage/shuffled off the mortal coil without having to face hefty medical checks. Basically: it could save your cheese in the long run.
Guaranteed insurability up to €100,000.
€4,000 Children’s Life Cover tossed in too.
Really fair underwriting for some health conditions.
Easy to amend your policy.
Accidental Death Benefit.
5. Irish Life
Cost: Decidedly, the most expensive. -1, chaps. You also get:
€7,000 Children’s Life Cover.
Option to convert to a Life Insurance policy – again, at an extra cost. Useful if you pay your mortgage off and don’t want to lose all those premiums you’ve been paying.
LifeCare benefit. This includes MedCare, a medical second opinion; NurseCare which is access to two confidential medical helpline services; and ClaimsCare, access to a claim’s assessor and claims counselling if you need it.
20 per cent extra cover in the future, without answering medical questions.
Accidental Death Benefit.
So to recap: the thing you need to consider is the price, but also all that extra stuff, which includes:
1. Guaranteed insurability
Also known as Life Events Option (LEO), because insurers love a good-ole, confusing synonym. It lets you increase your Mortgage Protection cover without any health checks/underwriting. It’s useful if you get a bigger mortgage on your second (or third, look at you with all your houses) go around.
Keep an eye on what’s offered: Aviva will only allow an increase of €40,000 while Zurich, Royal London and New Ireland go up to €100,000. But, Aviva will allow you to extend the years on your policy too if you are getting a longer mortgage, the other insurers will only allow you to increase your amount of cover. With those insurers, if you feel you will need to extend your term in the future, you should add the conversion option.
2. Children’s Life Cover
I know yeah: as a dad, this one always gives me the heebie-jeebies. But if you have kids, Children’s Life Cover is a consideration whether you like it or not. In descending order:
Irish Life: €7,000.
Royal London and Aviva: €5,000.
New Ireland: €4,000.
You should also take a look at how much children’s Serious Illness is included for free. So again, from the top:
Aviva, Irish Life, New Ireland, and Royal London: €25,000.
Zurich: again, zilch.
3. Waiver of Premium
This stops your premiums if you’re out of work due to illness/accident. Zurich is the only one here who offers it, and it kicks in after 13 weeks. Honestly, this could be a lifesaver, so don’t dismiss its significance. With the other insurers, you can add a Waiver of Premium, but it’ll cost you extra.
If your premiums are north of €100 per month, the waiver of premium looks even more attractive
4. Accidental Death Benefit
This is a bit of a funny one because of the name (most deaths, you might be thinking, must be accidental?) but it is useful in some instances. Basically, if you die because of an accident before your policy issues but after your insurer receives your completed application form, your family will get a payment of up to €150,000.
Royal London doesn’t offer it.
5. Medical Second Opinion
Access to an independent review of your diagnosis and treatment plan. A second medical opinion, basically. Free via Aviva and Irish Life.
6. Reinstatement Clause
Basically: if you forget/can’t make a payment and your policy is then cancelled, the insurer gives you the option to pay the arrears within a certain time. If you do they’ll put you back on cover or even pay out if a death had occurred when premiums were missed.
7. Dual Mortgage Protection
This little bad boy is the dirty secret of insurance. Most people end up with a joint policy, which pays out on the first death. Dual Mortgage Protection pays out on both. That’s two payments. The bank would get the first payment to clear the mortgage; the second would go to your family.
It’s an excellent way of getting Life Insurance for cheap, basically.
There are a couple of extra benefits as well, though you’ll have to pay for them:
8. Full Mortgage Repayment Guarantee
Here the insurer agrees to clear the outstanding balance on your mortgage regardless of interest rates.
Yeah, I bet you didn’t know this was a thing you might have to worry about.
Without this guarantee, there might be a balance leftover to be paid (if your mortgage interest rate creeps above 6 per cent) before your bank officially gives your other half/family the house.
9. Convertible Mortgage Protection/Conversion Option
With a conversion option, you can turn your Mortgage Protection into a Life Insurance policy. Handy.
All the Iriish insurers bar Aviva offer this benefit for extra moolah.
10. Underwriting Philosophy
If you’re in perfect health, you can choose any insurer.
Truthfully, I rarely see an application that doesn’t have some health condition or family history of a health issue. In that case, the most important thing is to choose the insurer that is most sympathetic to your particular situation. Forget about the bells and whistles. You need to find an insurer who will offer you cover at the lowest price with the least amount of hassle.
That’s where we come in. We’re the experts if you have a pre-existing condition.
The first thing you should do is complete this medical questionnaire so I can find you the most suitable insurer.
With all that in mind, what you do will depend on your circumstances and any other insurance policies you might have. As you can see from this big ol' list, it can get quite confusing with lots and plusses and minuses.
However, I stand by my advice: take a look at the cost first. Then look at the list of nine benefits and choose the ones that you think are important. Rank ‘em by most relevant. From there, scroll back up and see who comes out on top.