Mortgage protection/life insurance/house insurance

MrsBean

Howdy all,

The good news is we've just had an offer on a house accepted. The bad news is I'm just now looking at these other pieces I've been putting on the long finger but feeling a bit clueless. Could anyone please explain in simple terms the requirements at this stage?

The way I understand it, life insurance isn't essential, but a mortgage protection policy is essential before a bank will agree to drawdown.

What does the mortgage protection process entail? Is there a health check up or involvement with GP? No major health issues with either of us, one with mild asthma, one with a past work stress, both probably could be more fit but generally ok etc! What type of things come into play for the mortgage protection application or is it quite straight forward?

Does it take a long time, or is it generally quick? Just trying to budget time. Neither of us have a health insurance policy in place if that makes a difference..

Then with house insurance, is that essential to have in place from day one or is it something you can put in place once you move?

Thanks in advance, I welcome any guidance!

Geuze

MPP is a form of life insurance that is assigned to the lender.

Get quotes here:

www.labrokers.ie

lion.ie

beatthebank.ie

Generally, GP is not involved, unless medical issues are flagged.

If you state on the form that you have a medical condition, they may look for more information.

miezekatze

You'll need life insurance in place so that the house will be paid off in case you die. You don't need mortgage protection and personally I think it makes more sense to save up a rainy day fund than pay for mortgage protection. Our mortgage provider insisted on home insurance being in place before drawdown.

angbee

You will need to have the policies in place about a week before completion/drawdown.

We recently went through process of getting quotes, we had some minor health issues (thyroid lump and stomach ulcer investigations - neither came to anything but it has increased the premium). We had full quote within 48 hours - just went through Bonkers and then had a 30 min call with broker to go through the health questionnaire, health insurance didn't come into it at all when we enquired (we both have full coverage).

Mortgage protection insurance is for the balance of the loan and the coverage will reduce as your loan balance does over the term of your mortgage.

Life Insurance is for a fixed sum that remains the same throughout the term of the coverage.

You can add coverage to either for specified illnesses (i,e you can add protection if you were to fall ill and received a payment of 25/50/75% for an increased premium).

Mortgage protection is a cheaper policy than life insurance due to it reducing over the term.

Home insurance at minimum, you will need building insurance that covers at the minimum the cost of the home - there is a rebuilding cost calculator available on below website, as with cost of labour and materials currently it may be significantly more than the price you are buying for if it's an older home. Contents cover is not required for your mortgage but it's a good idea to cover the basics - cost of main furniture, appliances, office & garden equipment, in case of fire, theft, etc.

https://scsi.ie/consumer/build/calculator/

whatawaster

https://www.boards.ie/discussion/comment/120637558#Comment_120637558

You are confusion Mortgage Protection with Income protection I think.

Mortgage protection is similar to Life Insurance in that it pays the mortgage off in case you die. It differs from Life Insurance in that it only pays off the outstanding mortgage, nothing more, and it reduces in line with the reducing mortgage balance.

Income protection is where you receive an income if you are sick/incapacitated and unable to work

Geuze

https://www.boards.ie/discussion/comment/120637825#Comment_120637825

Note that the above poster is confused.

MPP pays off the mortgage if you die. Your next of kin does not get the cash, as the MPP is assigned to the lender, so the lender is paid directly.

MPP is a form of life insurance.

General life insurance is not connected to the mortgage, and your next of kin does receive the cash lump-sum.

An MPP can be level cover or decreasing cover.

Level cover = it always pays out the original mortgage amount, so leaving a bit for the spouse

Decreasing cover = the cover drops in line with the mortgage balance

3DataModem

Repeating what above said: Fundamentally the bank wants to have enough life cover so that if either person listed on the mortgage dies, the mortgage is paid off. They want to see the policy "assigned" to them, so they get the money from it before anyone else does (e.g. your estate) if you die. This can be achieved essentially in two ways;

• A "Life Assurance Policy" that pays out say 500k (an amount greater than the initial mortgage) over a term of say 30 years (a time longer than the initial mortgage). If the mortgage is a lot lower than the benefit - as it will be later in the mortgage term - your estate get to keep the surplus.
• A "Mortgage Protection Policy" (also known in the old days as as a decreasing term benefit) that pays exactly the mortgage amount when you die, whenever that is in the mortgage term. This is a lot cheaper.

The process is potentially very quick. Just go online and fill in a form. There are health questions, you need to answer them. If any of the health questions trigger anything with them, they may send a questionnaire to your GP. If any of the health questions REALLY trigger them, then they may send you to their own GP for a medial. The outcome could be one of three things

• You get approved for cover
• You get approved for cover, but at a higher than standard price (called a "Loading")
• You get declined for cover (rate, but it happens)
• You get an exclusion i.e. if you die of this specific thing, you don't get paid (very very rare these days)

You can never start this process too early.

Fill in the forms! Get the approvals! You are not committing to anything until your own chosen start date. If you have to wait for medical questions or visits or whatever... it could take time... so the earlier the better, even if you don't have mortgage approval yet.

phormium

A lot of confusing info above but last post is the clearest, what some people seem to be confusing mortgage protection with is 'repayment protection' which is the insurance that pays your repayments for a year if out of work due to accident/illness/redundancy. I don't even know if it's around anymore due to the previous misselling of it, definitely not essential.

Re the house insurance, apply for that and get it in place ready to be activated as once you sign the contracts you have an insurable interest in the house and will probably have to activate from then, if not then you will definitely have to have it in place prior to drawdown of the mortgage. So do the shopping around for that as soon as the valuation is done on the house by lender so you know how much to insure for.

paulwex

Hi there

Apologies if this is in the wrong forum,but we are close to drawdown with our mortgage so sorting out mortgage protection insurance at the moment.

I had a sister who passed away 28 years ago in her sleep from an undiagnosed heart issue, will disclosing this information result in a loading on the premium or worse again a lengthy delay?

Any opinions appreciated

phormium

https://www.boards.ie/discussion/comment/121270727#Comment_121270727

Hard to say but not disclosing it is not an option or you may as well just be throwing away your money!

Apply asap, there will be some relevant question on the form that covers this and when you fill that the company will probably want to contact your doctor for a report if for example it was something the whole family were then screened for. If it was just a one off unfortunate condition then they may not even enquire further, it all depends on what exactly the cause was, the insurance companies will have experts who look at these type of applications and decide what else if anything needs to be done.

But apply immediately so that any queries can be dealt with as quickly as possible, might be worth going through a broker as different companies have different underwriting criteria and one company might load for certain issues and another company not.