Editor’s note: First published 2017 | Refreshed October 2025 with updated insurer info, examples, and compliance details.

Mortgage Protection Insurance Ireland | Complete Guide 2025

This guide explains how mortgage protection works, what it costs, and how to avoid the classic mistakes first-time buyers make with their bank’s policy.

What is Mortgage Protection?

Mortgage protection insurance is a type of life insurance that clears your mortgage if you die during the term.
It’s compulsory in Ireland for residential mortgages (with some exceptions).
The cover amount reduces as your mortgage balance reduces, but your monthly payments stay the same.

In short, it ensures your bank gets repaid — but it doesn’t leave any extra money for your family.
That’s why many homeowners combine it with life insurance for extra peace of mind.

Here’s a quick explainer I recorded a while back — still relevant today, even if the haircut isn’t 😅

How Mortgage Protection Works (Step by Step)

1. You take out a mortgage — The bank requires you to have a mortgage protection policy in place before drawdown.
2. The cover decreases — The amount of cover reduces as your mortgage balance reduces, but your monthly premium stays the same.
   That’s good because you’ll never face a price hike — but bad because you’re paying the same for less cover over time.
3. If you die during the term — The insurer pays the remaining balance directly to the lender to clear your mortgage. There’s no leftover balance for your family — though they benefit indirectly because the home is now fully paid off.
4. If you repay the mortgage early — You can usually keep the policy running as a reducing life insurance plan, or cancel it once the loan is cleared.

When Do You Need It?

You need mortgage protection in place before drawdown. Most buyers arrange it at the binding contracts stage.
You can apply early and delay the start date until closing — it’s one of the easiest ways to stay ahead of your bank’s checklist.

15 Key Mortgage Protection Tips

1. You do not need full life insurance to draw down your mortgage — only basic mortgage protection (decreasing life cover).
2. But consider this: while mortgage protection is enough for the bank, full life insurance offers better protection for your family, because the payout doesn’t reduce — meaning there’s often money left over once the mortgage is cleared.
3. Have mortgage protection in place when signing binding contracts — you can set the start date in advance.
4. Dual life cover is better than joint life cover.
5. If buying as an unmarried couple, consider two single-life policies to reduce inheritance tax liability.
6. You don’t have to buy from your bank — shop around for value and benefits.
7. A good broker will be faster than your bank.
8. If you add serious illness cover, any payout goes to the bank — not you.
   Want illness cover that pays you directly? Consider income protection instead.
9. Premiums are fixed for the life of the policy; no need to reapply annually.
10. Only insure the mortgage amount (not the house price).
11. You don’t need to insure mortgage interest, just the principal borrowed.
12. If you have health issues, speak to a broker first to avoid being declined by your bank.
13. If you use e-cigarettes, insurers charge smoker rates (double the premium).
14. Smokers can see sample costs here: smoker life insurance rates.
15. Review your cover if you switch lenders or extend your mortgage term — your policy might need an update.

Mortgage Protection vs Life Insurance: Which is Better?

All you legally need to draw down a mortgage is basic mortgage protection (decreasing life cover). That’s the minimum the bank requires to protect their loan.

But here’s the part most people miss: mortgage protection benefits the bank, not your family. If you pass away, the policy clears the mortgage and that’s it — no extra money goes directly to your partner or kids.

Life insurance is different:

• The payout doesn’t reduce — if you take €300,000 cover, €300,000 is paid out whether you die on day 1 or day 30 of the policy term. The mortgage is cleared first, and any balance left over goes to your family.
• Your family can then choose what to do with that balance: keep cash back, cover day-to-day bills, or invest for the future.
• You can add options to extend or increase cover without new medicals as life changes (kids, new mortgage, etc.).

So, while mortgage protection is the legal minimum, many of our clients choose to step up to full life insurance instead — because it actually protects the people they care about, not just the bank.
If you’re unsure which fits best, see our Mortgage Protection vs Life Insurance comparison.

Mortgage Protection FAQs

Thanks for reading,
Nick
Editor’s Note: First published 2017, updated annually.