What’s The Difference Between Life Insurance & Mortgage Protection?


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

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

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.


Key Differences Summary

  • A Mortgage Protection policy is a legal requirement when taking out a mortgage. It is solely linked to the length and value of your mortgage. As the mortgage balance reduces over time, so too does the potential pay-out. Once the mortgage ends, the cover ends.
  • A Life Insurance policy, known as a term life policy, provides cover for a specific payment amount in the event of death during the term of the policy. The potential pay-out amount never changes while the policy remains in force.



What’s the right option for you?

  • If you already have a mortgage with a protection policy in place, you may consider switching to Laya Life. Get a quote to see if you could save on your current cost of cover.
  • If you are currently applying for a mortgage, we’d encourage you to get a great value mortgage protection quote from Laya Life with additional discounts for existing laya healthcare members.
  • Many people choose to supplement existing mortgage protection cover with additional term life insurance. This provides further peace of mind that the mortgage repayments will be taken care of, while also providing an additional financial pay-out for your loved ones, in the unfortunate event of your death.
  • If you are not interested in mortgage protection cover, then you should consider a term life insurance policy from Laya Life. Cover from as little as €10.10 per month, with pay out options up to €400,000.




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

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