Just like life insurance, mortgage protection can often appear more complicated and confusing than it actually is. Whether you’re looking to enter the property market or you’re further along the home-ownership journey, you’ve probably come across some myths and misinformation. Thankfully, the AA Mortgage Protection team are here to help you make an informed decision and get the best deal for you and your wallet.
Myth 1: You Must Buy Mortgage Protection From Your Mortgage Lender
Starting with the most widely believed myth. Many people will choose to take their mortgage protection from their mortgage lender, believing it to the convenient and the best deal. However, your mortgage lender won’t always give you the best price on mortgage protection, so taking a few minutes to shop around now could yield significant savings over the life of your mortgage.
Myth 2: There’s No Benefit To Shopping Around
As with any insurance product, shopping around is an important part of the purchasing process to avoid overpaying for your cover. Taking some time to look at alternative providers other than your mortgage lender could help you find a better price or benefits.
Myth 3: Switching Provider Is A Lot of Work
Just like any other insurance product, you can switch to another provider if you wish. However, many people don’t as they believe it will be a long, drawn-out process. This isn’t the case and, for most people, the shopping around phase is actually the most time consuming part of the switch. For example, with AA Ireland you can complete an online quick quote in just one minute.
Myth 4: If I Have Mortgage Protection, I Don’t Need Life Insurance
A common misunderstanding, but an incorrect one nonetheless. Mortgage protection is designed to issue a lump sum payment to your mortgage lender if you pass away prematurely, in order to cover the outstanding amount of your mortgage.
Life Insurance, on the other hand, provides a lump sum payment to your next of kin in the event of your death. In most cases, this sum is used to replace lost income or assist with the cost of raising your children.
Myth 5: My Next Of Kin Will Receive The Total Cost Of My Mortgage
Unlike life insurance, where your next of kin will receive a lump sum for a specific amount, your mortgage protection cover reduces in line with your mortgage as you make your monthly repayments. In the event of your death, a lump sum to cover the remainder of the mortgage will be issued – not a lump sum equivalent to the total of the mortgage when you first purchased cover.
For more information visit the AA Mortgage Protection site.