Mortgage Protection VS Term Life Policy

Hello

I am finalising a (very small) ftb mortgage and am trying to decide between the 2 types of policies above. I am finding it hard to find detailed information on the pros and cons so I was hoping someone here could help.Here are my details:

I plan to move my mortgage to a different company in the next few years.
The mortgage is over 35 years but I will be paying it off in considerably less time.
I am looking for the cheapest policy possible to serve the insurance condition.
It is very unlikely that I will top up my mortgage in the future.


I have already spoken to a broker who advised to go with the latter (more expensive) policy.

A mortgage protection (decreasing) policy will suffice as long as you don't extend or increase your mortgage. The new mortgage provider will accept the existing policy. A convertible term policy has the added advantage of not decreasing over the term and the convertible option will allow you to extend the policy at the end of the term without the need to provide further medical evidence or allow you to change the cover midterm (who knows what lies ahead, if you needed to change your life cover down the road, you cannot change an MP policy. If you developed a medical condition in between policies it could be problematic). Usually there isn't a massive difference in price between an MP & CT policy, but if you want to keep costs to a minimum than the MP policy should suffice, at least in the short to medium term.

Great, thank you for replying. I read the other threads on these polices in the meantime so I feel a bit more informed.

My broker advised me that if I switch my mortgage that my mpp would become invalid as it is assigned to a specific lender. From what you are saying he is wrong on this?

Also to clarify, as my mortgage amount decreases my montly/annual premium will also reduce?

Sounds like he's talking rubbish. Theres nothing stopping you getting the policy reassigned. Once you change mortgage provider, you ask the first lender to give you a cessation of interest letter. You give this to your life company who will discharge their interest and reassign to the new lender.

Jimbob is right, your broker is talking rubbish.

Firstly, your broker is trying to sell you a more expensive product when you have clearly expressed here and I presume to your broker that you just want the cheapest option to furfill your lenders needs. If your circumstances change in the future and you decide you need more cover (for dependents etc), then look at that point for a better policy.

Secondly, your broker is incorrect in regard to the mortgage protection policy not furfilling a new lenders needs. Once the sum assured and term of the new loan are not greater than your existing mortgage protection policy there is no reason why the policy cannot be re-assigned to your new lender.

In relation to mortgage protection premiums, they remain constant, only the sum assured decreases in line with the mortgage.


www.CheaperLifeAssurance.ie

Thanks again Steve