changing life assurance & specified illness plan

bungaro79

was sold the above by aib when we got our mortgage a few years back. we're paying about €60 a month (between us) on the specified illness and €40 on the mortgage cover (aib protection plan). i'm thinking i can get a better deal and am wondering if its just a case of getting on aib and cancelling?? is there usually a fee to do this?? there seems to be some places offering really big discounts on life assurance but i'm thinking you might be tied into a contract of some sort.

any advice would be greatly appreciated!

coylemj

Are you legally obliged to have both policies or did you just fall victim to a good sales pitch - I'm referring to the sickness cover? The banks make a fortune from illness coverage because there are so many exclusions that it's a highly profitable racket business.

Under competition rules they cannot tie you in to AIB products for the lifetime of the mortgage, you can take out a similar policy with any other provider and as long as AIB's interest is noted on the policy, they have no choice but to accept it.

As an absolute minimum you will need a mortgage protection (term life) policy, that is to say a life insurance policy which pays out only for death. If one of you has a specific medical condition, they may have insisted on illness coverage but I suspect that this is not absolutely necessary so you could chose to drop it altogether.

With the type of insurance you're talking about, you just take out a new policy and stop paying premiums on the old one, just make sure that you have the same level of cover and in the case of the mortgage protection policy, have AIB's interest noted on the policy.

What you pay for mortgage protection is dependant on how much you owe, whether it's a diminishing balance (so they'd need to pay less if you died near the end of the mortgage) and the age(s) of the policyholders. The fact that you took out the policy with AIB means that you probably didn't shop around at the time, even though they are legally obliged to inform you that you did not have to take the policies out with AIB.

killers1

bungaro79 wrote: »

was sold the above by aib when we got our mortgage a few years back. we're paying about €60 a month (between us) on the specified illness and €40 on the mortgage cover (aib protection plan). i'm thinking i can get a better deal and am wondering if its just a case of getting on aib and cancelling?? is there usually a fee to do this?? there seems to be some places offering really big discounts on life assurance but i'm thinking you might be tied into a contract of some sort.

any advice would be greatly appreciated!

If you want to send me a PM I can answer all your queries. You are free to take the mortgage protection from any provider and AIB will be satisfied once the new policy covers the amount and term remaining on the mortgage. The Banks interest isn't 'noted' on a policy (that's home insurance) but instead the policy is Assigned to the Bank and therefore cannot be cancelled without their agreement. You would arrange the new policy and send the original or copy of the policy document to the bank with the instruction to cancel the existing AIB one. In relation to discounts on offer some companies offer to rebate commission to you if you pay the premium annually. In relation to the specified illness cover this is always an optional extra and whilst your not obliged to have it I'd recommend keeping that additional cover if affordable.

bungaro79

cheers for the replies!

just pmed you there killers1.

coylemj, yep just pretty much signed up for both there without too much thought, tbh the main reason i did was i thought i wouldn't get the loan with them if i didn't! can't remember them telling me i could look at other places but then again it was nearly 4 years ago.

skippy2

On the specified illness cover i would be more in favour of Permanent Health Insurance - PHI - as this does not end up in the case of having to have a particular illness. I have an illness that would never be covered under the specified illness cover but will prevent me from returning to work long term. I have 15 years to retirement age. PHI has been a life saver. Others have covered the Mortgage protection issue

killers1

skippy2 wrote: »

On the specified illness cover i would be more in favour of Permanent Health Insurance - PHI - as this does not end up in the case of having to have a particular illness. I have an illness that would never be covered under the specified illness cover but will prevent me from returning to work long term. I have 15 years to retirement age. PHI has been a life saver. Others have covered the Mortgage protection issue

I'm delighted for you that you had the foresight to take out a PHI policy. In a perfect world we'd insure against every eventuality. PHI is a great product but is dependent on your occupation as each job falls into a different occupation class and is priced accordingly so for some occupations can be very expensive. I agree it's better than SI cover in so far as it covers you being unable to work for any reason as opposed to a list of specified illnesses. The other main difference is that it gives you a replacement income each month up to 75% of your current salary less and social welfare entitlement as opposed to SI cover which pays out a lump sum on contracting a specified illness. The price people pay for these policies are quickly forgotten when you need to make a claim and thankfully have cover in place.

coylemj

killers1 wrote: »

If you want to send me a PM I can answer all your queries.

Aren't we discussing generic issues surrounding insurance policies, why does some of the discussion need to be taken offline?

Is someone touting for business here?

iminireland

Bungaro, the banks are supposed to advise you if they are tied agents and that means they can only sell or advise you on their own products.

Coylemj, you have made a sweeping statement regarding serious illness cover that is not true. The banks do not make a fortune by exclusions on policies! Some policies have better cover than others and Bungaro you should check that you are happy with what cover your policy provides. You should bear in mind that it is only serious illness's that are covered and a lot of insurance companies now call this cover specified serious illness cover.

Some people are of the opinion that Income Protection provides better cover but it is completely different to Serious Illness, you should have a look at both and then make up your own mind which is better for you. It may be a case having both is best.

broker2008

Yes you are right.

There is scope for someone to have PHI, PMI, TI & SI - they all do a different job.

coylemj

iminireland wrote: »

Coylemj, you have made a sweeping statement regarding serious illness cover that is not true. The banks do not make a fortune by exclusions on policies!

I'm a customer of Bank of Ireland. A few years ago they wrote to me saying that they would like to me to meet one of their 'financial advisers' to review my situation and see what advice he could give me. I made an appointment and met a guy who turned out to be a salesman with Lifetime, the BOI's life insurance subsidiary and it soon became obvious that the sole purpose of the meeting was to sell me serious illness insurance.

So I make no apologies for saying that it is a highly profitable part of the business and I've seen consumer reports which highlight the fact that lots of people have taken out these policies and come up against stone walls when they discover that there are significant exclusions when it comes time to claim.

iminireland

coylemj wrote: »

I'm a customer of Bank of Ireland. A few years ago they wrote to me saying that they would like to me to meet one of their 'financial advisers' to review my situation and see what advice he could give me. I made an appointment and met a guy who turned out to be a salesman with Lifetime, the BOI's life insurance subsidiary and it soon became obvious that the sole purpose of the meeting was to sell me serious illness insurance.

So I make no apologies for saying that it is a highly profitable part of the business and I've seen consumer reports which highlight the fact that lots of people have taken out these policies and come up against stone walls when they discover that there are significant exclusions when it comes time to claim.

Serious Illness premiums have risen significantly in the last few years because insurers are anticipating and now paying out more claims than ever before. In relation to profit the commission paid to brokers/banks & other intermediaries for serious illness policies is the same as life cover. On the other hand the commission paid on Income protection is a lot higher, so I will let you decide which is more profitable business for banks & insurance companies. Your initial comments suggests that people should not have this type of cover because it is in your own words a "racket", this is very irresponsible and misleading.

In relation to claiming on serious illness policies, I agree that there are issues with regards exclusions on claims. I feel the majority of this issue can be dealt with by the people selling or advising on the product and mainly by the insurance companies themselves, the covers needs to be explained better. Your comment suggesting a bank profits by exclusions is completely wrong, nearly all the money insured on these policies is reinsured with a european insurer and the banks/insurance companies are quite happy to pay the claims as it doesn't cost them anything. The banks and insurance companies also get to use the claims figures as marketing stats, we now see a number of them doing this.

coylemj

iminireland wrote: »

Serious Illness premiums have risen significantly in the last few years because insurers are anticipating and now paying out more claims than ever before.

Disagree, more people aren't getting sick so if they are paying out more, it's because all of the negative publicity this type of insurance got in the press and they can't rely on indefensible excusions any longer so the gravy train has come to a screeching halt.

Are you a representative of the insurance business?

iminireland

coylemj wrote: »

Disagree, more people aren't getting sick so if they are paying out more, it's because all of the negative publicity this type of insurance got in the press and they can't rely on indefensible excusions any longer so the gravy train has come to a screeching halt.

Are you a representative of the insurance business?

I work as an independant financial adviser and the company I work with is not linked to any Life Company or Bank.

If you have anything to back up your outrageous claims that you have made in your first post please do (and i mean your first post, you have digressed enough!).

The purpose of my posts was to add balance, not defend, represent or sell anybody something.

coylemj

iminireland wrote: »

Serious Illness premiums have risen significantly in the last few years because insurers are anticipating and now paying out more claims than ever before.

Could you elaborate in plain English please why premiums have risen - has there been a sudden outbreak of some disabling disease in the population?

You choose to rubbish my claim that this business is a money making racket (because of exclusions) and then claim that you are not out to defend anyone, yet you make statements yourself and can't back them up.

Why have premiums for this type of insurance risen?

iminireland

coylemj wrote: »

Could you elaborate in plain English please why premiums have risen - has there been a sudden outbreak of some disabling disease in the population?

You choose to rubbish my claim that this business is a money making racket (because of exclusions) and then claim that you are not out to defend anyone, yet you make statements yourself and can't back them up.

Why have premiums for this type of insurance risen?

Insurance companies profit by taking in more premiums every year than the money they pay out in claims. FACT.

The claims on serious illness policies have increased over the last ten years. FACT.

The reinsurers paying out the claims don't want to lose money so they increase the premiums. FACT. Here's two links to articles backing this up.

http://www.telegraph.co.uk/finance/personalfinance/insurance/2831168/Critical-cover-costs-to-soar.html

http://www.thriftyscot.co.uk/102010/critical-illness-cover-costs-on-the-rise.html

I have used plain english on all my posts here and everything I have written is backed up by fact. If you would like to back up any of your outrageous statements in first your post then please do so.

I have nothing more to add to this matter except that I hope you got sorted Bungaro.