The Definitive Guide to Dual Mortgage Protection

What is Dual Life Mortgage Protection?

It’s a type of life insurance policy that will clear your mortgage if one of the insured persons dies during the policy’s term.

However, unlike joint life mortgage protection, a second payout may be possible if the second person also dies during the policy’s term.

Here’s a detailed explanation:

Features of Dual Life Mortgage Protection:

Two Lives Covered:

Unlike single life insurance, which covers just one person, dual life mortgage protection covers two people, typically partners or spouses.

The policy will pay out on the death of the first person.

Cover will continue on the life of the survivor on a reducing basis.

If the second person dies within the policy’s term, their estate will receive a payout.

Mortgage Repayment Focus:

The primary purpose of this insurance is to ensure that the mortgage debt is repaid in the event of a death

The payout usually equals the remaining balance on the mortgage at the time of death.

Beneficiaries:

The beneficiary of the policy on the first death is the mortgage lender.

The proceeds are paid to the deceased’s estate or family on the second death.

Benefits of Dual Life Mortgage Protection:

Financial Security:

Provides peace of mind knowing that the mortgage will be covered in the event of a death, ensuring the surviving partner or family does not face financial hardship.

Cost-Effective:

It can be more affordable than taking out two separate life insurance policies, as it covers two lives under one policy.

Double-Cover:

There is a possibility of a second payout (unlike on a joint policy where only the first death triggers a payout)

What’s the Difference Between Dual and Joint-Life Mortgage Protection?

Joint mortgage protection will payout on the first death only

First-person passes – the policy clears the mortgage
Policy ends

Dual life mortgage insurance can pay out for both deaths.

First-person passes – the policy clears your mortgage
Cover then continues for the second person, but it reduces over time.
Should the second person pass away, the policy pays out again to the family or estate of the deceased.
Policy ends

In the unfortunate event of both lives insured dying simultaneously, there will be a double payout.

But why would you want a double payout?

Imagine you take out a mortgage protection policy for €250,000

Let’s look at the worst-case scenario and compare what happens under each policy.

You both die on the first day of your policy.

Under a normal joint life mortgage protection, your policy would pay out €250,000 and clear the mortgage.

With a dual life mortgage protection policy, your policy would pay out €500,000; €250,000 to clear the mortgage and it would also leave €250,000 to your family.

Does dual-life mortgage protection not cost a lot more?

With some insurers, the premium for dual-life mortgage cover is the same as for joint-life mortgage protection.

With the other insurers, the difference in premium is negligible.

Benefits of Dual Life Mortgage Protection

Kate’s young husband Peter passed away unexpectedly.

The home she had made with Peter contained too many memories, and she wanted to return to her parents’ neighbourhood.

To move, she needed to take out a small mortgage because the money she received from selling their own house wasn’t enough to buy a new property close to her parents.

She got approval for a new mortgage, but she couldn’t get mortgage protection because of a recently diagnosed health issue.

She rang me in a panic.

I explained that she still had insurance in place for her life under their dual-life mortgage protection policy.

The relief was palpable!

She thought her policy ended when the insurer cleared the mortgage

Who is Dual Life Cover Not Suitable For?

If you’re not married, we recommend taking out two single-life policies and paying each other’s premium.

Doing so reduces the potential inheritance tax bill if one of you passes away in the first three years of the mortgage.

Mortgage Protection for Unmarried Couples

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I hope that clears up any confusion between dual and joint life mortgage protection.

If you’d like me to make a recommendation on the types of cover you should consider based on where you are in life, please complete this questionnaire, and I’ll be right back.

Alternatively, if you’d like a quick chat first, you can schedule a call here.

Thanks for reading

Nick 

Editor’s Note | We published this blog in 2017 and have updated it since.