You Don’t Need Life Insurance For A Mortgage

 

stop buying life insurance

Nick, I’m getting a mortgage from my bank, my banker is pushing life assurance. Do I need life insurance for a mortgage? John

Repeat after me

  • You don’t need life insurance for a mortgage.
  • You don’t need life insurance for a mortgage.

You don’t need life insurance for a mortgage!

Ignore the bankers.

They’re under serious pressure to hit a sales target:

Permanent TSB brings in bonus to turn staff into sales soldiers

Next thing he’ll tell you that his bank can offer you the lowest mortgage protection quote.

What a whopper!

He might even threaten you if don’t buy from him, it will delay your mortgage.

……or if you don’t buy from him, you’ll run into problems assigning your policy.

All of this is

Ignore it.

Take it from me, all you need is a bog standard, basic mortgage protection policy (also known as a reducing term life insurance policy)

But there’s not much difference in price, shouldn’t I buy life insurance to cover the mortgage and my family?

Nooooooooooooooooooooo.

Why?

You see we all fool ourselves into believing we’ll live to a ripe old age.

So by the time we’re called to the pearly gates, our mortgage balance will be tiny, the life insurance policy will pay out, clear that tiny mortgage and leave a substantial lump sum to take care of your family.

Does this sound like your plan?

But what if you die suddenly, in the early days of your policy?

Your life insurance policy will only clear your mortgage balance leaving nothing to take care of your family.

Let’s look at an example:

Say your mortgage will be €300,000 over 30 years so you take out a life insurance policy for €300k

You die in 29 years with a grand left to pay on the mortgage. After paying off the mortgage, your family will get €299,000.

But what happens if you don’t live for another 29 years?

You pass away in the next 12 months with €299,000 left to pay on the mortgage. After paying off the mortgage, your family gets just €1000.

€100o to replace your income.

Nobody wants to die leaving their family in financial trouble.

That’s why I advise taking out two policies if you have children or a financially dependent partner.

  1. Mortgage protection to clear your mortgage.
  2. Life insurance to provide for your family.

By arranging it this way, you know the mortgage protection will clear your mortgage and the life insurance will leave an agreed lump sum to take care of your family.

In short you get peace of mind – and when you think about it, that’s really what you’re paying for every month.

By the way, do you know who gets the serious illness payout on a mortgage protection policy?

Hint, it’s not you…and I bet that banker hasn’t explained that to you either.

He’s too busy trying to confuse you with gold, silver and bronze packages full of life insurance (even though you don’t have kids), serious illness cover (that’s paid to the bank), pretty crappy bill pay insurance and overpriced mortgage protection.

What else do you NOT need for a mortgage?

Hopefully, you now understand that you don’t need life insurance for a mortgage.

You don’t need serious illness cover either.

Nor income protection but if your sick pay is crap at work, I 100% recommend you get income protection regardless of whether you have financial dependents. Your income is your most valuable asset so it should be the first thing you insure. If you don’t have an income, how will you pay the mortgage?

How Income Protection Works In Ireland in 2020

Over to you…

Are you in the same position as John?

Is the bank giving you the hard-sell?

If you’d like some independent advice, I’m here to help you.

You can complete this financial questionnaire and I can make a recommendation on the cover you should be looking at.

The recommendation is free by the way.

Otherwise, give me a call on 05793 20836 and I can answer ALL your questions.

CALL ME BACK

Talk to you soon.

Nick McGowan
lion.ie | making life insurance easier

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The magic of Mortgage Income Protection: Or why you should get it instead of Serious Illness Cover 

Paying your mortgage is a pain at the best of times.

But imagine if you couldn't work long term due to illness.

What happens then?
December 18 2019 5 min read Blog Mortgage Protection Insurance

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