Am I paying too much for mortgage protection?

Three papers, three leaks

Mortgage protection is the most widely held life policy in Ireland, and our research series examined it from three independent directions: the demand side (*The Switching Gap* — how households behave), the supply side (*The Bank Premium* — how the product is sold), and the product design itself (*The Decreasing-Term Anachronism* — how the cover schedule is engineered). Each paper found a separate way money quietly leaks from a household's premium — independent in mechanism, cumulative in effect, and, most importantly, each one measured. Here they are in order of size.

Leak one — the door you bought through

The largest leak by far is the channel. *The Bank Premium* documents a structural surcharge on lender-channel mortgage protection: typically 20–30% more than the cheapest equivalent broker-quoted policy for an otherwise-identical risk. Same borrower, same cover, same claim if the worst happened — a materially different premium, every month, for up to thirty years, purely because of the door it was bought through at drawdown.

The law is squarely on your side here. Section 126 of the Consumer Credit Act 1995 requires that cover be in place on a housing loan — but the Competition and Consumer Protection Commission has confirmed, repeatedly, that the borrower is free to buy that cover from any insurer or intermediary. Your lender can require the policy; it cannot require *its* policy.

Leak two — the review you haven't run

The second leak is inertia, and *The Switching Gap* documents it: Irish households rarely review their cover once it is in place, so the gap between the premium they signed years ago and what today's market would charge them goes uncollected. Yet almost everything that moves that gap moves in the policyholder's favour over time — mortgages shrink, smokers quit, health improves, insurers reprice — and Irish term assurance carries no exit fees, which makes the re-comparison free and the switch penalty-less. The one golden rule: never cancel existing cover until the new policy is confirmed in force, in writing.

Leak three — the schedule's built-in cushion

The third leak is the smallest and the gentlest, and it lives in the product's engineering. *The Decreasing-Term Anachronism* shows that the standard Irish schedule decreases your cover along a notional 6% amortisation curve — a convention set in a higher-rate era — so against a modern 4% mortgage, the policy holds around €14,000 more cover than the outstanding balance for most of the term. The premium on that excess works out at roughly €26 a year for a typical household on the paper's central estimate.

Candour matters here, because this leak is only half a leak. In the paper's stress test, that surplus acted as a safety cushion — a household hit with a sharp rate rise at year five stayed fully covered throughout — and by law any excess proceeds on a claim are paid to the surviving borrower or the estate, not kept by the lender. The research proposes modernised schedule designs to the industry, costed at roughly €12–€13 per policy per year to deliver; until then, the buyer's takeaway is awareness, not alarm.

The fix costs nothing

This is the rare money problem with a free solution. A whole-of-market comparison prices your exact profile — age, cover, term, health today — across all five Irish life offices; there are no exit fees on the old policy and no charge for the exercise; and a Qualified Financial Adviser reviews the result before you act. Ten minutes of information against a leak that can run to a four-figure sum over a policy's lifetime is as good as value gets in personal finance.

The bottom line

Paying too much for mortgage protection is common, measured — and optional. Check the door you bought through, run the review the research says almost nobody runs, and let the schedule cushion do its quiet work in the background. The market will happily compete for you; it just needs to be asked.