Mortgage protection

sunnyday1234

Hi All
Have a question .
Suppose that  someone has a mortgage protection policy that pays out the remainder of the mortgage in the event of a death and at the time of taking out the policy, all was well with their health etc so the forms will filled up accurately and truthfully
If a few years later , the person develops an illness that results in their dying but they hadnt told the insurers about this - will the insurers pay out in this case ? I presume they did as the policy was taken out in good faith before the illness started

Henry Ford III

Yes.

seamus

Yes. That's basically the fundamental purpose of mortgage protection. It's not like car or home insurance where you have to renew yearly and provide any new material facts at renewal time.

The mortgage protection policy remains in place for the life of the mortgage (or until the death of a beneficiary), based on the material facts provided when you took out the policy.

This is one reason why it's a good idea to shop around and get a good policy at the start of the mortgage - if you try to switch to another insurer halfway through, then you have to disclose your medical history up to that point, which may be considerably worse than it was when you first took out your mortgage.

sunnyday1234

ok thanks for the help

Henry Ford III

seamus wrote: »

.....This is one reason why it's a good idea to shop around and get a good policy at the start of the mortgage - if you try to switch to another insurer halfway through, then you have to disclose your medical history up to that point, which may be considerably worse than it was when you first took out your mortgage.

If you move house after a few years and go for a higher sum assured over a new or longer term you'll have to be underwritten again regardless.

p.s. If there was a product that gave you automatic increase and extension options without underwriting it'd be abused. The sick and dying would suddenly buy massive houses.

mugsymugsy

Another key thing is to look into a life insurance policy that you can assign to a house rather than mortgage protection.

Granted you pay more but over time if you have a death you get the mortgage cleared and you have a sum of money.

Also don't take a policy from the bank shop around as I found it much cheaper going through a broker!

JoeyJJ

Henry Ford III wrote: »

If you move house after a few years and go for a higher sum assured over a new or longer term you'll have to be underwritten again regardless.

p.s. If there was a product that gave you automatic increase and extension options without underwriting it'd be abused. The sick and dying would suddenly buy massive houses.

There are products that will give you that flexibility, they are priced into premium sometimes sold as a separate Ryder. New Ireland had/have one, its premium adds up per month.

Even have a case study on it
Billy and Laura buy their first home and take out a Convertible Mortgage Protection Policy with New Ireland for €300,000
over 20 years. Five years later, on the birth of their 2nd child, they want to move to a bigger home but Billy has developed an
illness e.g. diabetes.
As Billy and Laura have the conversion option in place this means they won’t have to pay significantly higher premiums or
be declined for future cover and be unable to move to a bigger home because of a deterioration in health. By having the
conversion option in place, this removes the risk

Henry Ford III

JoeyJJ wrote: »

There are products that will give you that flexibility, they are priced into premium sometimes sold as a separate Ryder. New Ireland had/have one, its premium adds up per month.

Even have a case study on it
Billy and Laura buy their first home and take out a Convertible Mortgage Protection Policy with New Ireland for €300,000
over 20 years. Five years later, on the birth of their 2nd child, they want to move to a bigger home but Billy has developed an
illness e.g. diabetes.
As Billy and Laura have the conversion option in place this means they won’t have to pay significantly higher premiums or
be declined for future cover and be unable to move to a bigger home because of a deterioration in health. By having the
conversion option in place, this removes the risk

Wasn't aware of that policy but it's horribly risky surely?

p.s. I worked for an insurer years ago who offered a savings plan with 1 x annual premium sum assured without underwriting (limited income tax relief was available at the time). We had one proposal with an enormous (at the time) monthly premium. Policy was issued and a death claim came in shortly afterwards.

p.p.s. Caledonian had a group mortgage protection policy with IPBS without medical questions at one point. Suffice to say it didn't last long.

JoeyJJ

Its priced in, people who get sick don't think of trading up. You have a ceiling and you price the risk. I don't work for an insurer more on the services to insurer side so not up on everything that is offered by primary insurers.

Simplified UW or zero questions are available however for much lower sums assured usually.

sunnyday1234

having the mortgage paid off in the event of a death is enough for us as we have life insurance via work

Henry Ford III

JoeyJJ wrote: »

Its priced in, people who get sick don't think of trading up. You have a ceiling and you price the risk. I don't work for an insurer more on the services to insurer side so not up on everything that is offered by primary insurers.

Simplified UW or zero questions are available however for much lower sums assured usually.

Wanna bet? I've seen it historically. First hand too.