# What happens to mortgage protection insurance after the mortgage is paid off early



## Oxford (5 Sep 2017)

We are in a position to pay the outstanding balance of 30 K on our mortgage. The mortgage of 265k was taken in 2005 and we periodically added lump sums in the past 12 years. Our question is what happens to the mortgage protection insurance or what should we do about it.

We are in our early 40s. My wife is a public servant and I am working in construction business (have a pension through work).  We took a critical illness cover in 2005 as well. We have a 13 year old. We have 100 K in savings and 27k college fund for our child.

Any advice would be greatly appreciated. Thank you.


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## Monbretia (5 Sep 2017)

No reason why it can't continue on until the original end date but whether or not it's value for that only you can decide.

If it's a decreasing plan then the payout value is going down every year in line with how the original mortgage would have gone so just because you have 30k outstanding now after additional payments doesn't mean the amount that would be paid out on a decreasing policy is the same, it would not have taken into account any of the additional payments.

If it was a level plan as in the amount insured stayed constant throughout the term of mortgage, not as common but not unheard of, then you have a better level of cover but again you might be able to replace that cover with cheaper at this stage if you need it.

Probably best to check exactly what type of cover you have and get a quote for replacement before you decide which will be best.


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## Grizzly (5 Sep 2017)

The premium will be the same year one, year fifteen , year eighteen etc. Rather than have a huge annual premium at the start and a smaller one at the end they are designed this way.

However the sum insured decreases in line with the mortgage amount left outstanding.

You might not want to keep a policy with a high annual premium covering a decreasing amount.


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## Annie51 (5 Sep 2017)

Cancel the insurance when the mortgage is completely paid.


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## Brendan Burgess (5 Sep 2017)

Grizzly said:


> However the sum insured decreases in line with the mortgage amount left outstanding.



Did you read Monbretia's post? 

There are two types of life cover.  Most do decrease, but others are level. 

If Oxford has the level type, the life cover might be very good value. 

If he has the more common decreasing sum insured, then it may well be cheaper to get the same level of cover elsewhere.  Or he may decide that he does not need life insurance at all. 

Oxford - if you have developed any sort of health issue or even a health scare since you took out the mortgage protection policy, it could be very expensive to get a new life policy, so that would be a factor in keeping the current policy after you pay off your mortgage. 

Brendan


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## Oxford (5 Sep 2017)

Thank you very much Brendan. I am going to call Irish Life to find out what type of life cover I have. I am a bit lost when it comes to insurance policies.


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## Oxford (5 Sep 2017)

Called Irish Life and they have confirmed that I have a decreasing  plan and not a level plan. Although the mortgage will be paid off, I could continue with them once they receive the deed of release from the bank. It costs 24 euro per mo for both of us, but again because the payout  is decreasing every year is not a good thing in my opinion .
 I have  a life cover which is 20K each(dual life plan) through critical illness plan which costs us both 50 euro per mo.  but I don t think it is enough cover overall.   Can anyone suggest better life insurance options?


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## Brendan Burgess (5 Sep 2017)

You have a mortgage-free house and around €100k in savings.

You both work.

So if one of you dies, the other will still have an income. 

If your wife dies, you will probably get some sort of pension. 

Your PRSI will give the other a widow's pension anyway. (Check this to make sure.) 

So it seems to me that the early death of one you will not put the other in a difficult financial position. 

Don't bother with life cover. Put the premium into a savings account instead.

Brendan


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