Do You Need Life Cover When You Buy a Property?

The simple answer is yes. If you are obtaining a mortgage, you are required to get mortgage protection.

There are some circumstances where a lender might waive this requirement, but this is rare. The typical exceptions include:

• If you are aged over 50.
• If the mortgage is not on your principal private residence.
• If you cannot obtain the insurance or can only get it at a significantly higher premium.

Factors Affecting How Much You Pay

Several factors influence the cost of your mortgage protection premium:

• Age: Older individuals typically face higher premiums.
• Lifestyle: Activities such as smoking, heavy drinking, or engaging in dangerous pastimes like paragliding or mountain climbing can increase premiums.
• Occupation: Jobs with higher risks can lead to higher premiums.
• Medical History: Complex underwriting processes mean specific illnesses might increase your premium. Getting advice related to your specific medical conditions can clarify potential cost implications.

It’s crucial to be honest and disclose all relevant information on the proposal form to ensure that any claims are paid out without issues.

Alternatives to Mortgage Protection

1. Term Life Insurance:
   • This policy pays a lump sum to your named beneficiary or estate if you die during the policy term. It’s straightforward and one of the most affordable forms of life insurance.
   • Example: A term life insurance policy for €100,000 over 10 years will pay out €100,000 if you die within that term. If you survive the term, no benefit is paid, and the policy ends.

1. Whole of Life Insurance:
   • Guarantees a payout whenever the policyholder dies, provided premiums are maintained.
   • Premiums are higher than term life insurance because the cover can last for the policyholder’s entire life.
   • Some premiums are invested in investment funds, which can lead to higher costs over time. Some companies offer guaranteed whole-of-life rates, ensuring the premium does not increase for the same level of cover, provided you continue paying the premiums.

Choosing the right type of life insurance depends on your needs and circumstances. Consulting with a Financial Broker can help you navigate these options and select the best policy for your situation.