Mortgage protection advice?

birdmccabe

I am a 24 yr old female who is in the process of buying a property in Dublin. I have had a lot of different viewpoints on whether to go with basic mortgage protection or to go level term convertible. I have no dependents or husband but inevitably will have to consider these things in the coming years. I have salary protection already which includes serious illness cover.
Can anyone advise me as to the best option for mortgage protection purposes?

killers1

birdmccabe wrote: »

I am a 24 yr old female who is in the process of buying a property in Dublin. I have had a lot of different viewpoints on whether to go with basic mortgage protection or to go level term convertible. I have no dependents or husband but inevitably will have to consider these things in the coming years. I have salary protection already which includes serious illness cover.
Can anyone advise me as to the best option for mortgage protection purposes?

As a single applicant with no dependents or husband you need nothing more than decreasing mortgage protection as you have salary protection and illness cover via work. Your needs will obviously change as you go through life and your circumstances change but anyone trying to convince you that need more than this now is mis-selling you a product for commission reasons. Why would you need level cover? Who do you want to leave a lump sum to? You'll already be leaving an unencumbered property to your estate if you were to die...

coylemj

killers1 wrote: »

As a single applicant with no dependents or husband you need nothing more than decreasing mortgage protection as you have salary protection and illness cover via work. Your needs will obviously change as you go through life and your circumstances change but anyone trying to convince you that need more than this now is mis-selling you a product for commission reasons. Why would you need level cover? Who do you want to leave a lump sum to? You'll already be leaving an unencumbered property to your estate if you were to die...

+1 Good advice, resist all attempts to upsell. You don't need anything but the basic protection for a diminishing balance i.e. whatever the lender wants & nothing more.

thomasm

coylemj wrote: »

killers1 wrote: »

As a single applicant with no dependents or husband you need nothing more than decreasing mortgage protection as you have salary protection and illness cover via work. Your needs will obviously change as you go through life and your circumstances change but anyone trying to convince you that need more than this now is mis-selling you a product for commission reasons. Why would you need level cover? Who do you want to leave a lump sum to? You'll already be leaving an unencumbered property to your estate if you were to die...

+1 Good advice, resist all attempts to upsell. You don't need anything but the basic protection for a diminishing balance i.e. whatever the lender wants & nothing more.

As above, plus make sure broker shows you all the quotes from his quotation system to be sure you are getting the cheapest option. Couple of euros a month adds up over 20-30 years

broker2008

I'll offer you a different viewpoint. Over 15 years ago I sold a convertible term policy to a 24 year old who had no dependants at the time because I sold him the idea of the conversion option for use at a later time. 15 years later when the policy when about to expire, he exercised the option and received the same level of cover for another 15 years without the need for medical evidence. He paid the same price as a 39 would have paid but he had cancer at the time and would have been insurable. He died within the year and his wife received €127,000. The difference in premium ? £2 odd per month.

As a 24 year old female, non smoker, purchasing €200k of cover over 20 years, the difference in premium is 50 odd cent per month. In the latter years, you would continue to pay for the covertible term policy but not the mortgage protection policy. Most people working in the insurance industry would have convertible term as product of choice as opposed to mortgage protection. A 50 year old could have a different view and the price differential would be a lot greater. Different companies offer different options under their convertible term policies. Indexation ? that's a different story.

phormium

Totally agree with broker2008, sold these type policies for years and would always advise someone to go with the level & convertible option if they were young non-smokers. The difference in premium was usually tiny and chances are over the term they will eventually have dependents and at least they will have taken out a policy at a young age when it was cheapest. ( BTW I did not get commission, was on a basic salary, before someone says it , I just considered it best advice)

The first life policy I took out expires next year and I have no convertible option and will be unable to get new cover which I would like to have, I did not know enough about it when I took it out.

Browney7

broker2008 wrote: »

I'll offer you a different viewpoint. Over 15 years ago I sold a convertible term policy to a 24 year old who had no dependants at the time because I sold him the idea of the conversion option for use at a later time. 15 years later when the policy when about to expire, he exercised the option and received the same level of cover for another 15 years without the need for medical evidence. He paid the same price as a 39 would have paid but he had cancer at the time and would have been insurable. He died within the year and his wife received €127,000. The difference in premium ? £2 odd per month.

As a 24 year old female, non smoker, purchasing €200k of cover over 20 years, the difference in premium is 50 odd cent per month. In the latter years, you would continue to pay for the covertible term policy but not the mortgage protection policy. Most people working in the insurance industry would have convertible term as product of choice as opposed to mortgage protection. A 50 year old could have a different view and the price differential would be a lot greater. Different companies offer different options under their convertible term policies. Indexation ? that's a different story.

Very true. Although some providers have a life events option whereby if you have a kid or move house you can up your cover. Convertible mortgage cover exists also so you could convert to a level policy say 5 years down the line with the SA being the amount left at the time.

Conversion options are quite valuable as you never know whats down the line