Mortgage protection/life insurance

[cara28]

Hi we have life insurance cover at present. It just about covers our mortgage balance and about 30k left over. I've rang around to get quotes with a view to increasing cover. I'm a bit confused; can somebody tell me the difference between mortgage protection and life insurance? Would it be cheaper to get mortagage protection with decreasing value to just cover the mortgage and take out life insurance seperately? The cover we have costs E600 pa for E150k cover. Thanks in advance for any advice.

 

[Jimbobp]

Mortgage protection is a decreasing life cover (i.e it tracks the mortgage as you pay it off), primarily designed to pay off the mortgage if either you or your partner dies and is probably a condition of your mortgage to have this in place. After that the life/protection needs of each family is different but broadly speaking and IMO you should have separate term cover (Term cover will not decrease like a mortgage protection policy) in place to cover the loss of each others income for a number of years (this figure can fluctuate depending on income, children etc) and also some form of income protection (depending on what cover your employer(s) give you). Its not a massively complicated area but you should seek impartial advice before deciding on how to proceed. Best of luck.


www.powerinsurances.ie

 

[StevieC]

Its worth shopping around online as well as calling brokers as there are a number of brokers that offer discounts on the first years premium if you apply online with them. If you have further queries you can always call them as well.

 

[cara28]

Hi, thanks for the quick replies. A few of us were chatting about this at work yesterday and the prices we were paying varied widely. I guess what I'm looking for is mortgage cover which would reduce with the mortgage balance and also separate cover for life insurance. One other question, is life insurance taxable on payout?

 

[StevieC]

For mortgage protection, there is no issue really regarding tax as the benefit just pays off the outstanding balance on the mortgage.

In relation to life assurance, it depends who the beneficiary of the policy is. If it goes directly to your spouse then there is no tax liability. If it goes to someone else as part of your estate then usual inheritance tax rules would apply.