Home Buyers Guide

Chapter 8: Insurance

Insurance for home owners:

When you’re buying a home, there’s a variety of insurance products you should consider.

At a minimum, your mortgage provider will require you to have:

• Mortgage Protection (life insurance)

• House Insurance (structural cover)

You should also consider the following optional insurances:

• Serious Illness Insurance (which can be built into your mortgage protection cover)

• Contents Insurance (which is usually built into your house insurance cover)

• Mortgage Repayment Protection Insurance

What is mortgage protection (life insurance)?

Life insurance pays out a lump sum in the event of death of a policy holder.

A mortgage protection policy is a type of life insurance, which is designed to pay off your mortgage if you die during the term of your mortgage.

Typically, mortgage protection insurance is on a ‘decreasing term assurance’ basis. This means that the cover
reduces in line with the reducing balance of your mortgage.

So for example, if you take out a €250,000 mortgage over 30 years, your mortgage balance would be approx.
€81,000 after 25 years of mortgage payments (assuming an interest rate of 6.5%).

Your ‘decreasing term assurance’ is designed to pay off that reducing mortgage balance i.e. in this example, €81,000 if claimed in year 25.

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