Life Insurance and Mortgage Protection are both designed to provide your loved ones with financial protection should you die, but there are differences between each type of cover. Let’s explore both cover types and the differences between them.
Mortgage Protection cover is a policy that will pay off the remaining balance on your mortgage if you or your partner (if a joint policy) die during the mortgage term. The cover provides peace of mind that, should the worst happen, your mortgage will be cleared with no loan payment burdens for your loved ones.
Getting Mortgage Protection cover is a legal requirement set by banks before they will allow the mortgage to be drawn down. In most cases, Mortgage Protection cover must be in place before the purchase of your home goes through. However, you can, at any time after the purchase of your home, switch to an alternative Mortgage Protection provider during the term of the mortgage. They will require that the full amount of the mortgage loan and the full duration of the mortgage is covered by the insurance company.
The key point of difference, when compared with a Life Insurance policy, is that the Mortgage Protection policy is directly linked to the outstanding balance of your mortgage loan account. As you pay off your mortgage, the potential pay-out value of your policy reduces accordingly. Once your mortgage is fully paid off, your Mortgage Protection cover expires, as a pay-out would no longer be needed.
Life Insurance cover provided by Laya Life is known as a term life insurance policy. The policy is not linked to your mortgage and runs for an agreed number of years, regardless of any other factors. This means that policyholders are covered for their own death (or that of a partner/spouse if a joint policy) during the term of the policy, with a specific amount being paid to your loved ones should you pass away. You can choose how long you'd like to be covered for, and for how much.
Term life insurance refers specifically to the time frame, or period, for which you choose to be covered. Term life insurance is more flexible than Mortgage Protection as you can decide the length of the policy and the cost of your policy. This makes term life insurance more affordable, as you decide what you pay. It is usually taken out by those who have dependants like spouses or children. However, even if you don't have a partner or children, you can use term life insurance to help family members to pay off debts or settle your estate. It takes the burden off the shoulders of your loved ones.
Please note that the quote process on this website is non-advisory. Please call us on 01 536 8000 if you would like an advised quote