Q I’m finding it really hard to keep up with these price hikes and am cancelling unnecessary expenditure. As I don’t have any dependents, I’m thinking of cancelling my mortgage protection as it is very expensive. Is this a good idea?
A Mortgage Protection (MP) is a life insurance policy that helps repay the outstanding balance left on your mortgage if you (or your partner, if applicable) pass away before your mortgage is fully paid off. It is normally part of the terms and conditions of your mortgage that you enact and maintain this type of protection. There are many benefits for you too, including security for your family and peace of mind for you.
The most common and cost-effective way to set up mortgage protection is on a decreasing term basis. This means that as your mortgage debt reduces over time, the amount covered by your policy also reduces in line. The premium you pay remains the same.
There are various extra benefits (Illness cover for example) you can add to your cover that may suit you but can make it expensive. While your lender will insist you have mortgage protection, you’re only obliged to have the most basic life cover only version.
Switching your mortgage protection may mean you’ll save. You don’t have to have your cover with your lender and are free to source cheaper and/or better cover elsewhere.
The majority of respondents in a Financial Broker research survey carried out by a leading life assurance provider in Ireland said that their clients would be prepared to switch policies even if the saving was less than €10 per month. A saving of €5 to €10 per month on mortgage protection cover would be enough to make the majority of their clients change provider. Thanks to recent advancements in the marketplace and increased efficiencies, Mortgage protection rates are extremely competitive, creating an opportunity for clients to avail of these desired savings by changing their cover.
Such is the pressure people are under nowadays, that a seemingly nominal financial monthly saving can be the catalyst for reconsidering protection provider.
By Philip Cullen of Southeast Mortgages & Financial Services
This article aims to give information, not advice. Always do your own research and/or seek out advice from a Financial Broker before acting on anything contained in this article.