Mortgage Protection Insurance (MPI) is not an optional extra for mortgage holders. Under the 1995 Consumer Credit Act, mortgage lenders are required by law to ensure that borrowers take out mortgage protection insurance in Ireland. Why?
To cover the amount owed on the mortgage should the borrower die before the mortgage is repaid (any extra is passed on to a mortgage holder’s dependants or estate). In the case where two people are named on a mortgage, the insurance is paid when the first person dies.
To avoid a situation in which a borrower’s dependants are left with debts they cannot afford, or have their home repossessed.
The law is on the side of the consumer in this instance and exists to protect against serious financial difficulty, following the loss of a loved one. There are, however, a few exceptions to the law. You are not required to take mortgage protection insurance in Ireland if:
The property you are mortgaging is not your chief residence (investment only).
You are over 50.
You do not qualify for insurance due to serious illness, disability, etc.
You already have life insurance. However, it must be legally ‘assigned’ to a mortgage lender to cover the mortgage.
