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Buying a home is one of the most significant financial steps you’ll ever take. Along with the excitement comes a lot of responsibility, and that’s why mortgage protection insurance is required by lenders in Ireland.
Mortgage protection does an important job: if you pass away during the term of your mortgage, the policy pays off the outstanding balance. That means your family doesn’t have to worry about losing the roof over their heads at an already difficult time.
But here’s something many people don’t realise: mortgage protection only covers your mortgage. It doesn’t provide any extra money for your family’s everyday needs, education costs, or future plans. That’s where life insurance comes in.
What Mortgage Protection Really Does
Mortgage protection is straightforward:
- It’s tied directly to your mortgage.
- If you die, it clears whatever amount is left on the mortgage.
- The payout goes straight to the bank, not your family.
For example, if you took out a €300,000 mortgage and, after a few years, you still owe €250,000, your mortgage protection will pay that balance off if you pass away. The bank is happy, the house is secure, and your family doesn’t inherit that debt.
It’s a valuable safety net, but notice what’s missing. Your family doesn’t get any extra money in their hands. They keep the house, but now they still have to figure out how to pay for everything else.
Learn more about Mortgage Protection in our latest articles.
- Mortgage Protection Insurance in Ireland: Everything You Need to Know
- Exploring the Myths About Mortgage Protection Insurance
- The Benefits You Can Enjoy From Life Insurance While Alive
Life After Mortgage: The Hidden Costs
It’s easy to think that once the mortgage is cleared, your family’s financial worries would disappear. But in reality, the mortgage is only one piece of a much bigger puzzle. Day-to-day life comes with ongoing expenses, and those don’t stop if your income is no longer there.
Consider the monthly costs your family faces:
- Utility bills like electricity, heating, and broadband
- Groceries and childcare, which can easily run into hundreds each month
- School or university fees, along with uniforms, books, and activities
- Car loans or other debts that still need to be repaid
- Family holidays, healthcare, and lifestyle costs that make life enjoyable and manageable
These are the hidden costs of life apart from the mortgage. While having the mortgage paid off is a significant relief, it doesn’t replace the steady income that keeps everything else running. Without additional cover in place, your family may find themselves struggling to keep up with these responsibilities, and the financial pressure can be overwhelming during an already emotional time.
That’s why relying on mortgage protection alone isn’t always enough; it only solves one problem. Life insurance steps in to cover the rest, giving your family financial breathing room to handle everyday expenses and maintain some sense of normality.
Be smart with your money. Get a personalised quote today!
How Life Insurance Bridges the Gap
Life insurance works differently. Instead of paying the bank, it pays your family directly. They receive a lump sum, which they can use as needed.
That payout can:
- Cover everyday living expenses so bills are not a constant worry
- Pay for your children’s education or extracurricular activities
- Allow your partner to reduce working hours to care for the family
- Create a financial cushion for unexpected expenses
- Help maintain the lifestyle you’ve worked so hard to build
Where mortgage protection protects the house, life insurance protects the people inside the house.
Do You Really Need Both Life Insurance and Mortgage Protection?
In most cases, yes. Here’s why:
- Mortgage protection ensures the bank is paid and your family doesn’t lose their home.
- Life insurance ensures your loved ones can afford to live comfortably after you’re gone.
Together, they provide a complete safety net: your family keeps the home and has the financial support they need to move forward without money worries.
Learn more about the differences between Life Insurance and Mortgage Protection here.
A Family Example
Imagine this:
Sarah and John buy a home with a €300,000 mortgage. They also have two young kids.
- With only mortgage protection, if John passes away, the mortgage is cleared. Sarah and the kids can stay in the home, but she’s now left to cover all household bills, childcare, and school fees on her own income.
- With mortgage protection and life insurance, the mortgage is still cleared, but Sarah also receives a lump sum from the life insurance policy. She can use that money to cover childcare, help with education costs, and maintain some normality for the kids during a challenging time.
How Much Life Insurance Cover Do You Need?
The amount of cover depends on your family’s needs. A good rule of thumb is to think about:
- How many years your family would need financial support
- The cost of living, childcare, and education until your kids are grown
- Any outstanding loans or debts beyond the mortgage
- Your partner’s income and ability to cover household costs alone
Everyone’s situation is different, but most families need more than just mortgage protection to feel secure. To help you figure out the right cover amount, we’ve shared some guidance in our article.
Review & Save on Mortgage Protection
If you already have mortgage protection, it’s a good idea to review your policy. Many people don’t realise they might be overpaying, and with a quick review, you could potentially save thousands over the lifetime of your mortgage.
You can compare quotes from different providers and see not only the cost but also the benefits each one offers. It’s worth checking if your cover still matches your needs and whether switching providers could reduce your costs without sacrificing protection.
Be smart with your money. Get a personalised quote today!
Get a Life Insurance Quote
Mortgage protection is essential and ensures your family won’t lose their home. But it’s not designed to replace your income or maintain your family’s lifestyle. That’s where life insurance steps in.
Having both policies means you’re not only protecting the house itself but also protecting the life you’ve built inside it. If you’re unsure about the right level of coverage or the costs involved, get a quote today.
You can also speak with one of our financial advisors, who will help tailor a plan to suit your needs. This way, you’ll have peace of mind knowing your family is protected, not only with a secure home but also with the financial support to continue living life as normally as possible.
We also provide a wide variety of financial services, such as mortgages, serious illness cover, pensions, financial planning, health insurance, and savings & investments.
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All our content has been written or overseen by a qualified financial advisor. However, you should always seek individual financial advice for your unique circumstances.
