How it works: The amount of financial cover decreases month by month, roughly in line with the reducing balance of your outstanding mortgage debt.

The Cost: Because the potential payout for the insurer reduces over time, this is typically the most affordable and cost-effective type of mortgage protection available in Ireland.

Who receives the payout: In Ireland, a mortgage protection policy undergoes a legal process called Assignment. This means the policy is legally linked to your lender (the bank) as collateral for the loan. With a decreasing policy, the bank is the sole recipient. The insurance provider pays the lender directly to wipe out the outstanding debt, leaving your family with a mortgage-free home.

Best for: Standard homebuyers who want the lowest premium possible strictly to satisfy bank requirements and clear the mortgage balance if they pass away.

Example: You take out a 30-year mortgage for €300,000. If you pass away in Year 10 when your outstanding loan balance is down to €230,000, the policy will pay out the sum assured to clear the remaining debt.

How it works: The policy payout does not drop as your mortgage decreases. If you pass away at any point during the term, the original agreed amount is paid out.

Who receives the payout: Just like decreasing cover, the policy is assigned to your lender, meaning the bank has the first right to the funds to clear the outstanding mortgage. However, any remaining financial surplus does not stay with the bank. When you initially set up the policy, you name your chosen beneficiaries (such as your partner or children) directly in the application. The insurance provider will pay this extra cash surplus directly to them as a lump sum.

Best for: Individuals with interest-only mortgages (where the capital balance never drops until the end) or homebuyers who want to provide an extra financial cushion for their loved ones in addition to clearing the house debt.

Example: You buy a Level Term policy for €300,000 over 25 years. In Year 20, your actual mortgage balance has dropped to €80,000. If you pass away, the policy pays out the full €300,000. The bank takes €80,000 to clear the mortgage, and your named beneficiaries receive the remaining €220,000(subject to standard Irish inheritance tax rules depending on who inherits).

How it works: It starts as a standard mortgage protection policy linked to your loan. However, it includes a “conversion option” that allows you to transform it into a new fixed-term or lifelong personal life insurance policy before the original term ends — without providing fresh medical evidence.

The Cost: Because of the valuable guaranteed insurability feature, the premiums for convertible cover are slightly higher than a standard non-convertible policy. However, it can save you thousands in your 50s or 60s if your health declines.

Who receives the payout: While you are paying off the mortgage, the policy remains assigned to the bank, and they receive the payout first to clear the debt. However, once you exercise your option to convert it into a personal life insurance policy, the bank assignment is removed. You then name your personal beneficiaries directly in the new application, and future payouts go fully to your loved ones.

Best for: Homebuyers who want to guarantee they can secure affordable life insurance later in life for family security, estate planning even if they develop medical conditions.

Example: David takes out a 30-year convertible mortgage protection policy for €300,000 at age 35. At age 55, he is diagnosed with a medical condition, but he also has new financial responsibilities, like funding his children’s education.Even though his mortgage isn’t fully paid off yet, David uses his conversion option to transform his policy into a permanent Life Cover for the full €300,000 without any medical checks. If he passes away, the policy will first send €100,000 to the bank to completely wipe out his remaining mortgage debt, and the remaining €200,000 will be paid directly to his estate as a financial cushion.

Single Life Cover: This policy covers just one person. It is used if you are buying a home on your own. The policy pays out once if the policyholder passes away during the term, clearing the mortgage for their estate.

Joint Life Cover: This is the most common option for couples. It covers two people but pays out only once on the “first death”. If one partner passes away, the policy clears the mortgage, the home is secured for the surviving partner, and the policy immediately ends. The surviving partner is left with a mortgage-free house but no further life insurance cover from this policy.

Dual Life Cover: This option covers two people independently under one policy and can pay out twice. If the first partner passes away, the policy pays out to clear the mortgage. However, the policy remains active for the surviving partner. If the second partner passes away later during the term, a second payout is made directly to their beneficiaries (e.g., their children).

The Cost: Single is the cheapest. Joint cover is slightly more expensive but highly cost-effective for couples. Dual Life cover carries a small premium, but the cost difference between Joint and Dual in the Irish market is often very small, making Dual Life excellent value for family protection.

Who receives the payout: For both Joint and Dual, the bank holds the assignment and receives the money first to clear the mortgage. Under Dual Life, the second payout goes 100% to your personal beneficiaries or estate, completely bypassing the bank.

Best for: Joint Life is best for couples on a tight budget who strictly want to clear the debt. Dual Life is best for young families with children who want to ensure that if the worst happens to both parents, the kids will receive a substantial financial inheritance.