When you buy a house you must also buy two types of insurance, a life policy to ensure the loan is paid off if you die prematurely and a policy to cover the building against fire or other damage. Serious illness mortgage protection and contents cover are optional, but are increasingly popular. In the latter case anyone living in a major city would be quite foolish if they did not insure their possessions.

Another optional home insurance - and one that is worth an objective look, especially in light of the recent Seagate closure - is mortgage repayment insurance. Designed to repay your mortgage in the event that you lose your job, fall ill or have an accident and cannot work, it will give you up to 12 months repayment breathing space per claim.

Any Seagate workers in Clonmel who bought homes in the past two years - and there were many who did - and had the foresight to take out this insurance will find a small bit of consolation in that decision. Similarly, anyone with a relatively short-term illness or disability and who, for whatever reason, has no other sickness cover would also probably be satisfied they made the right decision.

Dublin broker, Mr Paul O'Byrne of O'Byrne Insurances, thinks these policies fill a gap for some, but not all homeowners: "Premiums are fixed and unlike PHI [permanent health insurance] don't vary according to one's age, sex or occupation. In other words, older borrowers in higher-risk occupations are subsidised by younger borrowers in desk-bound, non-physical jobs." For many self-employed in particular, they may be the only affordable income-replacement type insurance they can buy as there is no medical examination required.

But there are downsides. This is the only policy on the market that covers someone for both redundancy and illness, but most lenders require that you take it up within a month of taking out your mortgage contract.

You are excluded from making any claim for the first 90 days after purchase; you cannot claim for a pre-existing illness or if you were aware of impending redundancy. Benefits are not paid for the first 30 days from the time of illness or redundancy. If you are hospitalised, benefits are paid usually after the first five or 10 days. The self-employed cannot get redundancy benefits, but they are entitled to accident and sickness (disability) protection and hospitalisation benefit. This insurance is also quite expensive. You can only claim for a 12-month period per episode and up to a maximum value of £1,000 per month. Some contracts allow an unlimited number of claims, others limit the total claim period to 36 months over the life of the mortgage.

Most lenders arrange premiums on a monthly basis, per every £50 or £100 block of cover. To cover a £40,000 loan with repayments of about £400, would cost about £18£20 per month or up to about £240 a year.

You don't have to insure the entire amount, and if you have a joint policy, usually for no extra cost, only half or a proportionate sum insured will end up paid, depending on which person is claiming. Most policies allow you to cover 120 per cent of the repayment, the extra amount assigned to meet the cost of other insurances.

Compared to the cost of PHI policies, which pay you a weekly income until retirement, or even a serious illness contract that pays off your mortgage, the relative cost of mortgage insurance is very high. PHI worth £100 a week cover for 20 years can be purchased by a 30-year-old person for less than £16 a month; £40,000 worth of serious illness cover will cost about £10 or about £13 for joint cover.

Mortgage repayment insurance is the only contract that covers redundancy and illness and a few months of unemployment will certainly justify the annual premium, but you need to weigh your circumstances carefully before making any decision.