Life assurance & HIV

Silfa

Hi all,

I have a friend of mine who plans to apply for a mortgage soon. He is HIV-positive but intends to conceal this fact in order to make sure he gets the cover.

I tried to convince him he shouldn't do it, but I ran out of arguments. He is single and doesn't mind if the insurance company refuses to pay in case he dies prematurely (which he almost certainly will).

Are there any other arguments that I should try on him?

Thanks!

Layinghen

Some insurance companies insist on a HIV test before offering even basic policies like mortgage protection.

He should go to a Broker, tell the truth and see what is available in terms of cover for him.

The_Morrigan

Silfa wrote: »

Hi all,

I have a friend of mine who plans to apply for a mortgage soon. He is HIV-positive but intends to conceal this fact in order to make sure he gets the cover.

I tried to convince him he shouldn't do it, but I ran out of arguments. He is single and doesn't mind if the insurance company refuses to pay in case he dies prematurely (which he almost certainly will).

Are there any other arguments that I should try on him?

Thanks!

What's the point of buying a house if he doesn't care if the insurance company will cover in the event of his death. When they find out the cause of death and the fact he lied, the bank will hold the house.
Would be cheaper to just rent, save on homeowner taxes, legal fees for the sale and years of worthless insurance premiums.

Silfa

Layinghen wrote: »

Some insurance companies insist on a HIV test before offering even basic policies like mortgage protection.

He should go to a Broker, tell the truth and see what is available in terms of cover for him.

Yes, but I'm pretty sure he's already found a company that doesn't require HIV test.

Silfa

The_Morrigan wrote: »

What's the point of buying a house if he doesn't care if the insurance company will cover in the event of his death. When they find out the cause of death and the fact he lied, the bank will hold the house.

Are you sure? What would be the legal grounds for this? The bank will certainly want to sell the house to recover the outstanding amount of loan, but I don't think they can just take everything?

Layinghen

He does realise that if he dies the mortgage doesn't die with him. If the life company don't pay out on the Policy the bank will then go after his estate for the balance. His next of kin could be elderly parents, does he want them to have this scenario foisted upon them?

Nino Brown

Why should he care? He just needs the policy to get the mortgage, if he dies, he's not going to care. It's not the morally right thing to do, but there's no real downside for him.

Nino Brown

Layinghen wrote: »

He does realise that if he dies the mortgage doesn't die with him. If the life company don't pay out on the Policy the bank will then go after his estate for the balance. His next of kin could be elderly parents, does he want them to have this scenario foisted upon them?

Okay, maybe there is a downside.

The_Morrigan

Silfa wrote: »

Are you sure? What would be the legal grounds for this? The bank will certainly want to sell the house to recover the outstanding amount of loan, but I don't think they can just take everything?

'Everything' is the house. They hold the deeds and therefore can sell the house to recover their debt, they don't have to sell to make a profit.

Silfa

Layinghen wrote: »

He does realise that if he dies the mortgage doesn't die with him. If the life company don't pay out on the Policy the bank will then go after his estate for the balance. His next of kin could be elderly parents, does he want them to have this scenario foisted upon them?

I suppose his reasoning goes like this. If he tries to get insurance policy and fails, he'll have to spend pretty much the same amount of money (monthly) on rent — and this is going to be the money gone forever. While if he cheats and does buy a house, there is a non-zero chance that there will be at least something left after the sale of the house.

It probably makes some sense, financially, but I was wondering if there are caveats in this situation that he might not be aware of?

The_Morrigan

Silfa wrote: »

I suppose his reasoning goes like this. If he tries to get insurance policy and fails, he'll have to spend pretty much the same amount of money (monthly) on rent — and this is going to be the money gone forever. While if he cheats and does buy a house, there is a non-zero chance that there will be at least something left after the sale of the house.

It probably makes some sense, financially, but I was wondering if there are caveats in this situation that he might not be aware of?

Its cheaper to rent and open a savings account.
His reasoning is warped and fraudulent.

Silfa

The_Morrigan wrote: »

Its cheaper to rent and open a savings account.

I'm renting myself, and I'd be paying less if I took out a mortgage for a similar apartment. Maybe it's different for houses, but I doubt it. We all know there's been a surge of cash sales in Dublin in the recent months. That's precisely because real estate is more profitable than savings accounts.

The_Morrigan wrote: »

His reasoning is warped and fraudulent.

I fail to see how it's fraudulent. Yes, technically it's a fraud to lie on your insurance forms, but there's no one to profit from it so it's not a fraud in the true sense. The policy will simply be cancelled once it becomes known (as it certainly will) that he lied about his HIV status. In fact, the insurance company will even benefit from it as they'll get to keep all the premiums but will never have to pay out anything.

The_Morrigan

Silfa wrote: »

I'm renting myself, and I'd be paying less if I took out a mortgage for a similar apartment. Maybe it's different for houses, but I doubt it. We all know there's been a surge of cash sales in Dublin in the recent months. That's precisely because real estate is more profitable than savings accounts.


I fail to see how it's fraudulent. Yes, technically it's a fraud to lie on your insurance forms, but there's no one to profit from it so it's not a fraud in the true sense. The policy will simply be cancelled once it becomes known (as it certainly will) that he lied about his HIV status. In fact, the insurance company will even benefit from it as they'll get to keep all the premiums but will never have to pay out anything.

There is more than just a mortgage repayment, you can't compare monthly rent and mortgage in isolation.
Mortgage, management fees, property tax, water charges, repairs and upkeep for appliances/utilities, house insurance, life insurance, payment protection etc etc, vs rent.

He is attempting to gain from his non disclosure...that is fraudulent behaviour and really really stupid. The lack of valid life insurance also means a breach of the mortgage contract, events of default in that contract could be any number of consequences, especially if there is negative equity.

Layinghen

I am sorry but his thinking is totally flawed. Get him to check it out, he is not the first HIV positive person to buy a house, there has to be a way of doing this correctly.

People have learnt to their cost that property prices do not just go up they can plummet as well. Sure he may get a house at a good price and over time it may go up in value but it also could drop. Then his next of kin have a real problem, not of their own making but of his.

If the bank somehow found out that he made a misrepresentation in his loan application then he has breached the terms of his mortgage and they could demand that it be cleared immediately. It will be a condition of his loan that the correct cover is in place.

Silfa

Layinghen wrote: »

If the bank somehow found out that he made a misrepresentation in his loan application then he has breached the terms of his mortgage and they could demand that it be cleared immediately. It will be a condition of his loan that the correct cover is in place.

That's a valid argument, thanks!

Although I'd hope our medical records aren't available to whoever wants to take a peek at them )))

Thoie

He'll get the cover - it may just be more expensive, the same way a smoker's policy is more expensive than a non-smoker, or someone with diabetes or a history of heart disease will have a higher premium.

He can shop around - the bank providing the mortgage will offer cover, but you can get cover from pretty much anywhere, as long as the bank is the beneficiary and the policy will cover the outstanding mortgage balance.

Basically no matter who comes looking, they work out the likelihood of that person dying before the mortgage is paid off, and decide the premium based on that.

The_Conductor

I have a 100% loading on my life assurance policy- because of my history of serious illness (Crohn's Disease and other autoimmune conditions). That said- the life assurance company agreed to a policy that comes to almost 200% of the outstanding balance on the mortgage- as agreed, so if the worse does come to pass- there would be a small lumpsum for my wife and kids.

Your friend doesn't know how his situation may change in the future. People with HIV can live for decades now- there may not be a cure- but there are programmes in place to manage it as a long term medical condition- like Crohn's or Diabetes or indeed pretty much any other condition. Yes- it is most probably a life limiting disease- but your friend certainly has the possibility of a few decades of good health- something that he really needs to consider- and he also needs to consider how his life may change and the life choices he may make in those years.

Aside from any other factor- while prices may make buying seem attractive at present- versus renting- this is almost solely because of the abnormally low interest rates we have. They are not going to stay this low forever- normalisation of rates is considered to be an ECB overnight rate in the region of 4.5%, against the current backdrop of an overnight rate of just 0.5%. It would be wise for your friend (or indeed any prospective purchasers) to factor a probable interest rate increase of this amount into their equations. In addition- you will have numerous other costs associated with owning a property- that you do not encounter when renting- property tax, maintenance, management charges, insurance etc etc etc- they add up damn fast.

Your friend is taking an almost fatalistic shortterm view- and aside from anything else- is committing fraud- by not disclosing his HIV status to any prospective life assurance company. He may reason this away by saying- sure- I'll be dead anyway- he may not be- what happens if he is in longterm illness- unable to pay the mortgage, and the life assurance company become aware of his situation and withdraw his cover. And the lender then demand immediate repayment of the mortgage as it was obtained under fraudulent pretences? Its not so far fetched. However ill he might be- he could be really up the creek..........

camphor

Layinghen wrote: »

He does realise that if he dies the mortgage doesn't die with him. If the life company don't pay out on the Policy the bank will then go after his estate for the balance. His next of kin could be elderly parents, does he want them to have this scenario foisted upon them?

The estate may be liable for the balance but his next of kin won't have to pay. At worst they will not get anything from the estate.

Potatoeman

The_Morrigan wrote: »

There is more than just a mortgage repayment, you can't compare monthly rent and mortgage in isolation.
Mortgage, management fees, property tax, water charges, repairs and upkeep for appliances/utilities, house insurance, life insurance, payment protection etc etc, vs rent.

He is attempting to gain from his non disclosure...that is fraudulent behaviour and really really stupid. The lack of valid life insurance also means a breach of the mortgage contract, events of default in that contract could be any number of consequences, especially if there is negative equity.

Many of the things you mentioned a tennant pays or are passed onto them through rent increases. The advantage of buying when repayments are about the same as rent is stability and asset ownership. When the mortgage is cleared you own the asset whereas you will always be paying rent and it will likly increase higher than mortgage payments over its term.

Potatoeman

Double post.

L1011

From what I've seen, a dwindling number of insurance firms are actually requiring HIV tests for normal term mortgages (~20 years), but they would be likely to find out from the medical report regardless once someone is already diagnosed.

The_Conductor

Potatoeman wrote: »

paying rent and it will likly increase higher than mortgage payments over its term.

Don't bet on it. Mortgage repayments are at historically low levels- they have never ever ever been this low. If 'normalisation' occurs- those with mortgages are probably looking at very least at double their current repayments (on average). The saving grace for the Irish economy- is the large number of homes without a mortgage on them.

roro2

Under the Consumer Credit Act, there are some instances where the lender can legally waive the requirement for life cover on a principal private residence (but that's not to say they will). From memory, these are when someone is aged 50+, someone is uninsurable (this could be the case here and the individual would need to provide letters of decline from insurance companies) or if the cost of the policy is unaffordable due to significant loadings. I don't have a reference for it, but it might be Section 126 of the Act - google should help.

For what it's worth, if it's a small mortgage, the medical questionnaire is clean and no suspicion is raised there's unlikely to be the need for a medical/doctor's report/HIV test.

killers1

HIV tests are generally only requested for a life cover policy in the following circumstances;

1. Life Cover required exceed €1.5M
2. History of sexually transmitted infection
3. Applicant has in the last 10 years resided in a country with an increased incidence of HIV

Unfortunately at the moment being HIV positive is an auto decline for life cover terms. Your friend's best course of action is to apply for cover, get a decline letter from the Ins Co and revert to their lender to see if they are willing to waive the life cover condition on the mortgage. It depends on the bank but generally where an applicant is single & has no dependents the Banks tend to be more agreeable to waiving the life cover requirement when a person has been declined cover. The larger the deposit he is paying towards the purchase the better his chances of obtaining the banks agreement.

Potatoeman

The_Conductor wrote: »

Don't bet on it. Mortgage repayments are at historically low levels- they have never ever ever been this low. If 'normalisation' occurs- those with mortgages are probably looking at very least at double their current repayments (on average). The saving grace for the Irish economy- is the large number of homes without a mortgage on them.

You can get a mortgage for 650 a month versus 900+ renting. We would likley see higher rents too with interest rate increases. Its people that borrowed more than 200k that would be in real trouble.

runawaybishop

Potatoeman wrote: »

You can get a mortgage for 650 a month versus 900+ renting. We would likley see higher rents too with interest rate increases. Its people that borrowed more than 200k that would be in real trouble.

That's a mortage without any of the insurances you will need though.

The_Conductor

Potatoeman wrote: »

You can get a mortgage for 650 a month versus 900+ renting. We would likley see higher rents too with interest rate increases. Its people that borrowed more than 200k that would be in real trouble.

Most people borrowed more than 200k- those who borrowed less are in a small minority.

Also- the correlation between interest rate increases and rent rises, is not a direct correlation- its an indirect correlation, with a last measured coefficient of 0.6. There are factors other than interest rate increases, most notably lack of supply, which are far bigger factors in determining rent increases.

Mrs OBumble

The_Morrigan wrote: »

What's the point of buying a house if he doesn't care if the insurance company will cover in the event of his death. When they find out the cause of death and the fact he lied, the bank will hold the house.
Would be cheaper to just rent, save on homeowner taxes, legal fees for the sale and years of worthless insurance premiums.

Well he'll be dead, so it won't really worry him! Whereas if he's renting and a landlord decides to legally end his tenancy at an inconvenient moment (eg when he's really sick), he has no comeback and a major problem to deal with.

Life insurance for a single person with no dependants is honestly one of the most stupid ideas I've ever heard of.

I can understand why the banks want it for a mortgage - but if they'd done their homework properly and only lent on properties that were realistically valued and to people with reasonable deposits, they should be able to take the risk of the property sale not covering the outstanding mortgate amount.

Silfa

killers1 wrote: »

HIV tests are generally only requested for a life cover policy in the following circumstances;

1. Life Cover required exceed €1.5M
2. History of sexually transmitted infection
3. Applicant has in the last 10 years resided in a country with an increased incidence of HIV

Unfortunately at the moment being HIV positive is an auto decline for life cover terms. Your friend's best course of action is to apply for cover, get a decline letter from the Ins Co and revert to their lender to see if they are willing to waive the life cover condition on the mortgage. It depends on the bank but generally where an applicant is single & has no dependents the Banks tend to be more agreeable to waiving the life cover requirement when a person has been declined cover. The larger the deposit he is paying towards the purchase the better his chances of obtaining the banks agreement.

Thanks, killers1!

Is there a definite list of counties whose past residents have to submit HIV test results?

yoginindublin

there are certain nationalities that need to get an hiv or hepa b test for the coverage irregardless of amount.

micar

I work for a life assurance company. I don't think we would cover someone with HIV. Not 100% sure.

I have a life assurance policy with another life company. I was not asked to go for a medical but I've a full clean bill of health.

If he did not disclose the HIV, then the life company may not payout on death due to non disclosure.

I've seen complaints when we have declined due to non disclosure. The view we took is that the company would not have taken on the risk had they known their full medical history.


Another point, If he advises his HIV and get turned down then he'll have to inform then next assurance company that he was previously declined cover. The second company (provided permission is given) can seek an explanation from the first company as to why cover was declined.

Thread very carefully on this.

Silfa

Thanks, micar. It looks like the friend of mine did his homework and investigated all options before settling on the decision to hide his condition. I mean, if currently all companies turn all HIV+ people down, then there's not much that you can do...

Can you disclose if there's a list of nationalities that are always required to submit HIV test results?

micar

Silfa wrote: »

Thanks, micar. It looks like the friend of mine did his homework and investigated all options before settling on the decision to hide his condition. I mean, if currently all companies turn all HIV+ people down, then there's not much that you can do...

Can you disclose if there's a list of nationalities that are always required to submit HIV test results?

TBH, I have no idea. I don;t work in new business or underwriting.
Sorry

runawaybishop

yoginindublin wrote: »

there are certain nationalities that need to get an hiv or hepa b test for the coverage irregardless of amount.

I think you are mean regardless of the amount?

Tescosolvakia

Bank of Ireland offers life assurance for some people with HIV.

http://www.bankofireland.com/about-bank-of-ireland/press-room/press-releases/item/169/bank-of-ireland-life-offers-life-cover-to-hepatitis-and-hiv-sufferers-in-conjunction-with-hse-state-insurance-scheme/

Also look at www.hepcinsurance.ie

If he's not eligible for cover from the above then he can sign a waiver and so would not require life assurance. There are a few categories of borrowers who can sign a waiver instead of taking out a life assurance policy.
This may reduce the LTV the lender is offering as the house will be sold at death and they don't want a shortfall!

If he does not disclose his HIV status the policy is voided when it's discovered and the loan could be immediately called for...emphasis on the "could be".

micar

Tescosolvakia wrote: »

Bank of Ireland offers life assurance for some people with HIV.

http://www.bankofireland.com/about-bank-of-ireland/press-room/press-releases/item/169/bank-of-ireland-life-offers-life-cover-to-hepatitis-and-hiv-sufferers-in-conjunction-with-hse-state-insurance-scheme/

Also look at www.hepcinsurance.ie

If he's not eligible for cover from the above then he can sign a waiver and so would not require life assurance. There are a few categories of borrowers who can sign a waiver instead of taking out a life assurance policy.
This may reduce the LTV the lender is offering as the house will be sold at death and they don't want a shortfall!

If he does not disclose his HIV status the policy is voided when it's discovered and the loan could be immediately called for...emphasis on the "could be".

that states that "Securing a mortgage that will inevitably require some form of protection plan, may be more difficult for those who have been infected by Hepatitis C and/or HIV through contaminated blood product"

Tescosolvakia

micar wrote: »

that states that "Securing a mortgage that will inevitably require some form of protection plan, may be more difficult for those who have been infected by Hepatitis C and/or HIV through contaminated blood product"

Well I don't know how he got HIV!
Also my post says if he isn't eligible for cover under that then he can sign a waiver.

gaius c

Layinghen wrote: »

He does realise that if he dies the mortgage doesn't die with him. If the life company don't pay out on the Policy the bank will then go after his estate for the balance. His next of kin could be elderly parents, does he want them to have this scenario foisted upon them?

Why would his next of kin be liable for his debts unless they go guarantor on the mortgage?

gaius c

To add to Killer's list, I know gay couples who were required to have HIV tests as part of the mortgage approval/life assurance process.

Layinghen

gaius c wrote: »

Why would his next of kin be liable for his debts unless they go guarantor on the mortgage?

It is the estate that would be liable. The point I was trying to make is that surely you would not want elderly parents who are dealing with losing their child having the winding up of the estate being such a mess.

camphor

Layinghen wrote: »

It is the estate that would be liable. The point I was trying to make is that surely you would not want elderly parents who are dealing with losing their child having the winding up of the estate being such a mess.

What mes? It is the same work to wind up a solvent estate as an insolvent one, maybe even easier. the per rep can surrender the house to the bank and tell everyone else to go bugger. No need for a grant of probate even.

L1011

gaius c wrote: »

To add to Killer's list, I know gay couples who were required to have HIV tests as part of the mortgage approval/life assurance process.

Illegally, if they weren't requiring every other couple in the same age/health situation.. Any relationship, sexuality, or assumed of either based questions of requirements for insurance forms or medicals are illegal. One of the main insurers was hauled over the coals for it a few years ago. Its not deemed a valid actuarial basis anymore, like gender isn't either.

You can require everyone to have a test in certain circumstances, but you cannot solely require people you know or assume to be gay/MSM.

Mrs OBumble

Layinghen wrote: »

It is the estate that would be liable. The point I was trying to make is that surely you would not want elderly parents who are dealing with losing their child having the winding up of the estate being such a mess.

It would be pretty damn irresponsible of a person in this situation to:
1) not have a will, or
2) to have elderly parents as the executor.

Silfa

Several people above suggested that past residents of certain countries will need to do the HIV test regardless of insurance amount and other circumstances. Does anyone know if that's true? I would assume this could be true for immigrants from Africa, but what about Eastern Europe?

killers1

Silfa wrote: »

Several people above suggested that past residents of certain countries will need to do the HIV test regardless of insurance amount and other circumstances. Does anyone know if that's true? I would assume this could be true for immigrants from Africa, but what about Eastern Europe?

Eastern Europe, generally no.

Layinghen

Mrs OBumble wrote: »

It would be pretty damn irresponsible of a person in this situation to:
1) not have a will, or
2) to have elderly parents as the executor.

Agree 100% but remember this is the same person who is planning to knowingly make a false health declaration in order to try and get mortgage protection cover. Unfortunately I would assume therefore that making a will to get all his affairs in order might not be high on his list of priorities.

Silfa

killers1 wrote: »

Eastern Europe, generally no.

Thanks!

Silfa

Layinghen wrote: »

Agree 100% but remember this is the same person who is planning to knowingly make a false health declaration in order to try and get mortgage protection cover. Unfortunately I would assume therefore that making a will to get all his affairs in order might not be high on his list of priorities.

Yes, let's turn this thread into a discussion of what's morally acceptable :rolleyes:

Rosier

Potatoeman wrote: »

Many of the things you mentioned a tennant pays or are passed onto them through rent increases. The advantage of buying when repayments are about the same as rent is stability and asset ownership. When the mortgage is cleared you own the asset whereas you will always be paying rent and it will likly increase higher than mortgage payments over its term.

Depends on eg your age.

I made the decision to sell and rent a decade ago. On a pension it was getting impossible to pay for repairs, replacing equipment etc.

Property can easily become a costly millstone. And I have found it hard to get reliable workmen in Ireland.

Never had rent raised on me and so easy when things do wrong. Last winter the heating broke down and recently the water pump. Fixed promptly and at no cost to me.

I pay the utilities I use is all as I would in an owned house

Mrs OBumble

Layinghen wrote: »

Agree 100% but remember this is the same person who is planning to knowingly make a false health declaration in order to try and get mortgage protection cover. Unfortunately I would assume therefore that making a will to get all his affairs in order might not be high on his list of priorities.

I don't think that's a valid assumption.

Lots of people getting Rent Allowance are knowignly making false declarations to Welfare about how much rent they pay, as it's the only way that they can get accommoation. I don't see this as morally any different.

Silfa

Very different. If a person claims rent allowance by making false declarations, s/he is stealing from taxpayers, plain and simple. On the other hand, a person who cheats on his or her life assurance form is only possibly reducing the inheritance that will be left to his heirs. And unless by making so he or she is depriving their small children of basic means to live and have education, everyone has complete moral right to do whatever they want with the property they own.