Homeowners have been warned that they may be significantly overpaying for their mortgage protection cover. Switching from a mortgage protection insurance policy sold by the bank that provided the mortgage to another provider could lead to savings of €6,000 for a family with 15 years remaining on their mortgage.
Research by life insurance and pensions company Royal London Ireland shows that using a broker rather than getting cover from a bank can yield savings of up to 28%. Mortgage protection insurance is a form of life insurance designed to protect mortgage repayment. If the policyholder dies while the policy is in place, the policy will pay out a capital sum sufficient to repay the outstanding mortgage.
Cost comparisons undertaken by Royal London Ireland compared the premiums that state that a mortgage protection policy with identical cover was almost 30% more expensive with a bank than through a financial broker, and there is a very simple reason for this. Brokers have access to multiple life companies’ products and prices, rather than just one provider, which is generally the case for banks, so they can shop around to get the best product and price to meet their customers’ individual needs.
The broker market is shown to be far more competitive and offers better value to customers than dealing directly with a bank. Many people take out mortgage protection cover with the lender that is providing their mortgage, but they are free to buy from any provider at any point when paying the mortgage.
The research found that a couple aged 30, with a mortgage of €250,000 over 35 years, could save just under €8 a month, or close to €3,000 over the term of the mortgage. A couple aged 50 with a €500,000 mortgage, with 15 years to go, could save €32 a month, or just under €6,000 over the remaining 15 years. Both couples were looking for dual-life mortgage protection, a type of policy designed to cover two people, usually partners or spouses, and it typically pays out upon the death of the first person insured. Cover then continues for the surviving individual but on a reducing basis. The primary purpose of this insurance is to ensure that the mortgage debt is repaid in the event of a death.
Purchasing the same level of mortgage protection through a financial broker is significantly cheaper than through a mainstream bank – on average by 27.5%. The difference in cost is substantial over time.
The report suggests that by reviewing their policy, consulting a financial broker, and possibly switching, homeowners can make significant savings. With new mortgage providers entering the market, and the likelihood of a European Central Bank interest rate cut later in the year, many people will be looking to switch mortgage providers and should take the opportunity to also look at their mortgage protection cover.
For those looking to achieve the best insurance solutions, Dooley Insurance Group offers comprehensive services as an insurance broker. By consulting with Dooley Insurance Group, homeowners can benefit from tailored advice and potentially significant savings on their mortgage protection cover. Contact Dooley Insurance Group today to explore your options and secure the best possible rates for your needs.
