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Mortgage Income Protection V’s Critical Illness Insurance

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How would you pay your mortgage if you were unable to work long term due to illness?

The most important monthly bill in any household is your mortgage repayment.

But if you could no longer work due to an illness or accident – how would you continue to make those repayments?

Mortgage income protection covers up to 75% of your usual income when you’re off work due to any illness or injury.

Let’s take a look at how it works and compare it to serious illness cover:

What is mortgage income protection?

It’s a helping hand that pays your mortgage if you’re unable to work due to any illness, injury or disability.

Mortgage income protection works like standard income protection but costs less.

  • Standard income protection replaces your income until you return to work.
  • Mortgage income protection will pay your mortgage until you can return to work.

Why do I need it?

Let’s say you can’t work and your employer doesn’t offer sick pay.

How do you pay your mortgage?

Disability benefit is €188 per week.

If you’re self employed, you get nowt, not a sausage, so not even disability benefit for you.

Could you survive on €188 a week?

Would it cover basic food, heating etc?

Even if it pays the essentials, how do you pay your mortgage?

That’s where mortgage income protection comes in.

A mortgage income protection policy will pay your mortgage if you can’t work  due to illness.

It will stop the bank kicking you out of your home..like they have to a lot of unfortunate people recently.

How does mortgage income protection work?

Get up to 75% of your usual income when you’re off work due to illness or injury:

How much you choose to protect depends on your existing sick pay arrangements, and what level of cover you require to maintain your lifestyle.

You pay:

A monthly premium determined by your age, occupation and health status.

If you are absent from work due to illness or injury, the insurer provides you with a replacement income until you return to work, or until your chosen retirement date if you’re not fit to return to work before then.

Choose when you want the payments to start:

There is an initial waiting time at the start of your claim, called the Deferred Period. You can choose from three, six or twelve months (13, 26 or 52 weeks).

For many people, their employer will pay them for a period at the start of an absence due to illness or injury. It’s after that, you need the cover most.

The amount you pay won’t change:

The amount you pay does not change over the term of the policy as long as your benefits remain the same.

And the amount you pay won’t increase if you make a claim.

Hospital cash benefit:

A daily replacement income is paid if you are in hospital for more than seven days during your deferred period.

Relapse benefit:

The insurer will automatically restart your benefit if you have a relapse within six months of returning to work – there will be no deferred period in this case.

The most significant benefit is the peace of mind it brings knowing that should the worst happen, you can focus on your recovery without having additional financial worries.

How does it compare with serious illness cover?

  • Serious illness cover will pay one lump sum if you contract a specified serious illness.
  • Mortgage income protection will pay you a regular monthly income until you get back to work.

How much does income protection cost?

For the purpose of this article I won’t go into the factors that influence the cost of income protection.

But for as little as €33.45* per month you could protect the repayments on a mortgage of €200,000.  Your premiums are also eligible for tax relief at your marginal rate.

Over to you…

You don’t know what the future will bring.

You’re more likely to suffer an illness that keeps you out of work long term than to die.

My advice:

Cover all bases with a little bit of everything.

Don’t blow the budget on life insurance only. Consider income protection and/or serious illness cover too.

Remember if you lose your income, you won’t be able to pay your life insurance premiums.

Your income pays for everything, it should be the first thing you protect.

If I can help, get in touch.

Read more : Links to our other income protection articles.

Nick McGowan
lion.ie | making life insurance easier

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