Mortgage Protection Questions
A list of the most common Mortgage Protection Questions we are asked and the answers we give. We hope you find it helpful.
When you are taking out a loan you are free to shop around for your own Mortgage Protection cover. The purpose of the Mortgage Protection policy is to clear the outstanding balance of a repayment mortgage in the event of your untimely death. Mortgage protection is a form of Life Insurance (also called life insurance but we will use the words Life Insurance because this is the term used by the Insurance Institute of Ireland who lead in setting professional standards, education, and training in Ireland). Mortgage protection provides a specified amount of cover, which decreases over the term of the policy. The cost of the cover remains unchanged throughout the policy term.
If your loan is a repayment type (sometimes called an annuity loan) where the amount you owe decreases gradually as you make your repayments then a Mortgage Protection Insurance policy is the most popular choice and is the most cost effective type of cover.
If your loan is interest only then you do not need Mortgage Protection Insurance but instead you need a Life Insurance policy, where the cover remains at a constant level. You only need one insurance policy to protect your loan. Mortgage Protection Insurance or Life Assurance but not both.
If you are in good health then you should apply for cover a max of three months before you need your loan cheque. Don’t apply for a mortgage protection policy if your timeline for closing on your loan is greater than three months away.
The purpose of a mortgage protection policy is to clear your loan if you die. Therefore you don’t need the policy when you haven’t drawn down on your loan. You will need the policy about a week to ten days before you need your lender to hand you the loan cheque. If you are sure you are going to need your loan cheque within the next three months then now is the time to apply, otherwise hold off applying until later. If you know you are going to close on your loan within the next three months but are unsure of the date, then you can apply now and we will hold off issuing your policy until you have a precise date. We will process your application and you can get back to us at a later date to let us know when you need your policy to start. The advantage is all the paperwork will be out of the way and you’ll have the security of knowing you can obtain cover. You do not need the Mortgage Protection policy when you are signing or house hunting and don’t apply for a mortgage protection policy if your timeline for closing on your loan is greater than three months away because your application may expire and a new one may be needed.
If you have not finalised a closing date for your loan and are unsure of the date you would like your Mortgage Protection Insurance policy to start from, then on your application form simply write ‘Start Date To Be Advised’.In this way we will process your Mortgage Protection Insurance application but the insurance company will hold off issuing your policy until we receive your instructions giving us a date to proceed. The advantage is that all paperwork is out of the way. Your lender will generally require the Mortgage Protection policy document a week before you need the loan cheque.
If you are closing on your loan within the next three months then you can apply now and we’ll put your Mortgage Protection Insurance policy on hold until you need it. The max validity of an application is between 3 and 6 months. If your time line for moving in is more than three months away, then you would be better off waiting to apply for cover nearer the date.
You can request a free Mortgage Protection Insurance quotation online – click on one of the following for a single quote, or a joint quote. The results will show the cheapest provider found. You can then ask us to send you an application form (or you can download one) which you complete, scan or post back to us. We don’t complete applications by phone because we feel clients need time to give an accurate and considered response to the questions asked. Most urgent applications can be processed the same day. Your completed application form can be e mailed back to us or you can send it to us by post to –
The application form should be returned to LABrokers, Freepost, FGSS10, Newcastle, Greystones, Co Wicklow.
LABrokers is paid a commission for setting up your mortgage protection policy. However, because we take less commission and have volume business discounts we use this to your advantage by arranging your policy at a lower price. In 1997, LABrokers was the first Irish insurance broker to sell a policy online (our first client was from Tralee, Co. Kerry) and over the years our ability to obtain bulk discounts from insurers means we can get you exactly the same policy as you would get elsewhere but cheaper than if you went directly to your bank (there are also other advantages of not taking out your banks policy – see Disadvantages of taking your lenders policy) or to the insurance company. The insurer still handles your premiums (not LABrokers) and looks after the administration of your policy. We realise as a customer you require an excellent price on your insurance but ongoing service in the years to come is also important to you. In this respect we have an established record and we are committed to meeting these expectations in the future.
Many people take out a mortgage for say 25 or 30 years but many have the intention of clearing it earlier. Calculating how much a policy would cost or how much you could save over the term of the policy only holds true if you actually keep it that long and most people don’t. With LABrokers you can cease your mortgage protection policy at any time (if your policy is being used as collateral then you need the assignee’s permission before you cancel a policy)> If you stop paying premiums, your life cover will also stop.
When returning the form, mark your application form to us, please write ‘Urgent’ along the top to let us prioritise it or let us know by Contact Us via our online form or phone.
Kindly Contact Us at anytime or phone 01 2810577 Mon to Fri 9am to 1pm and 2pm to 5pm and we’ll help in any way we can.
We will process your application as soon as it is received. The vast majority of correctly completed applicant’s policies are ready to go the same working day and in some cases it can be as quick as two hours. If the applicant has disclosed an adverse health history (e.g. high blood pressure, a recent operation etc) on the application, then the insurance company may, in some cases, write to their GP for a medical report (at no cost to the applicant). Doctors generally reply within 10 days. So a typical decision is obtained in 12 days.
From when we receive your application we will e-mail you with regular updates to keep you fully posted. If you’d prefer us to update you by text or phone please advise us.
Once you have been accepted for Mortgage Protection and when you advise a start date, the policy documents are posted directly to you. In many cases we can e-mail the policy documents to you or by prior arrangement you can collect the documents directly from the insurer. When you take out a policy you are entitled to a 30-day inspection period. If you are not completely satisfied during that period, you can cancel the Insurance policy without any questions being asked and you will receive a full refund of any premiums that may have been paid.
In the vast majority of applications – No
As with all types of mortgage protection, you will have to fill in an application form in which you will have to answer certain medical questions. In a small number of cases, especially for applicants with a serious or ongoing medical condition, you may have to have a medical examination (the insurance company pays this fee directly to your doctor) or the life company may ask your doctor for a medical report from records. However, most medical requirements have been replaced by more recent innovations such as more detailed medical questionnaires, nurse medicals (where a nurse calls to you) or tele-underwriting (where an underwriter with experience in the type of illness you have disclosed, contacts you by phone to obtain more detailed information). All medical information is completely confidential. LABrokers or anyone else is not permitted to have access to your files. If you have a serious medical condition, please feel free to call us on 01 2810577 Mon to Fri 9am to 1pm and 2pm to 5pm before you apply. Most people who apply for mortgage protection with us get it at the price quoted. If the insurer cannot accept you at the premium quoted then they may make you a written offer and it would be up to you to decide whether or not to accept.
If you are in doubt ask your lender how much cover they require you to have. In general your lender will require a policy with a level of cover that is not less than the total amount that you are borrowing. The policy should run for not less than the term of your loan. For example if you borrow a total of EUR 200,000 over 20 years. Then you will require a policy for EUR 200,000 over 20 years.
If you are using our service to compare the price you are currently paying for your mortgage protection with the best that’s currently available on the market, then on our “Free Quotation Request” form for Mortgage Protection you should enter an amount which reflects the present balance (rather than the amount you originally borrowed -ask your lender for the figure) and you should also enter the remaining term (rather than the original term) rounding up if appropriate (e.g. you cannot have a policy for 12.5 yrs, must be 13 yrs). Please note if you are on course to clear your loan earlier than intended, your policy must still be for the remaining term on your loan agreement and not the remaining years you think / hope to clear it in.
All plans are available on a Single Life and Joint Life basis. The Single Life basis covers one person. The Joint Life basis covers two people, with the benefit being paid on first to die only. The premium payment shown on your quote is the total you pay.
The quote is dictated by your age, whether you smoke or not, the amount of cover you require and over how many years it is required. The rate quoted is the total amount you pay. Quotations are subject to underwriting. Premiums will not increase during the term and the plan is not subject to a review (increase) in the future. Some Mortgage Protection plans on the market can be reviewed – a review basically means that the company can ask you to pay more for your cover at some date in the future. All Mortgage Protection Insurance policies that we quote have guaranteed premiums throughout the term of the policy.
A lender will not advance a loan unless it is protected by a suitable policy. However, to encourage competition and by law, you do not have to accept the lenders own policy. Please see below ‘Disadvantages of taking your lenders policy’ where we show you why having your own policy rather than what your bank offers is to your advantage. In recent times, many bank employees trying to reach sales targets have been disregarding The Consumer Credit Act, 1995 (see below) by using tactics to put people off shopping around for their own mortgage protection. This is illegal. Your lender cannot refuse you or imply refusal just because you don’t accept their policy.
Disadvantages of taking your lenders policy.
The Consumer Credit Act, 1995, gives you the right to choose your own Mortgage Protection Insurance policy. Many people arrange their Mortgage Protection cover in the most convenient way possible, by filling in the mortgage protection part of their loan application form. However, convenience has its price:
By shopping around, you can ensure that you get the best value for your money
In the future, should you want to change your mortgage provider, an independent Mortgage Protection Insurance policy would keep your policy in force, whereas cover under your original lender’s group scheme would cease
Independent cover allows you the freedom to change mortgage provider without having to replace your existing cover, a real concern if your health has deteriorated.
No. The lenders name is not noted on the Insurance policy until you hand them the policy document for ‘assignment’ (see below).
When your application has been processed and you have instructed us to start your policy, you will receive your policy document by post. This is the document your lender will require before they release funds. It’s just a matter of handing them the policy for assignment (you just sign a simple form that they provide). When you assign a policy you effectively transfer ownership of the policy from yourself to the lender. In this way you pay the premiums but the lender owns the policy and has first call on the proceeds in the event of a claim. If after clearing the loan there is any surplus then this amount is paid to your next if kin.
There is a considerable difference in the amount charged for a smoker versus someone who doesn’t smoke. Many people will have given up smoking as their New year’s resolution and are currently not smoking. In the eyes of an insurer a non smoker is a person who has not smoked any tobacco products in the past 12 months
Insurance companies differ on their views of a risk. If your health is not the best, it may be worth while contacting us before you submit your application. The above also applies to those who are involved in hazardous pastimes or sports such as racing, diving, mountaineering, potholing or recreational aviation.
‘Switching is easy’ Most people do not realise they are free to shop around for their own mortgage protection. If you want to save money then the good news is you can now switch your mortgage protection cover at any time – it’s your right and is the law (Consumer Credit Act, 1995).
When it comes to mortgage protection prices people are paying too much
(A) Ask your lender for two pieces of information:
What is the current amount of cover they need you to have on your policy?
How many years are left on my loan?
You don’t have to meet with one of your lenders financial advisers to obtain this information.
(B) Once you have the above information then get a Quote for a new policy from LABrokers.ie.
(C) Take out a new policy.
(D) Hand the new policy to your lender and.
(E) Decide whether or not you wish to keep your existing policy. If you decide to cancel your existing policy then you can only do this when your lender has received your new one. You need to write to them asking them to cancel your policy and requesting them to send you a pro-rata refund on the unused portion of your premium.
Your lender can insist you get mortgage protection insurance but you are free to shop around and you do not have to buy it from your lender.
You do not have to take the mortgage protection policy your lender recommends. Your lender cannot refuse you a mortgage just because you don’t accept their policy. Your lender must accept any suitable policy that is assigned to them – this means that if you die, the insurance company pays the policy benefit direct to your mortgage lender.
If you want to take out a new mortgage protection policy, wait until this is in place before cancelling an old one
You should not cancel your mortgage protection policy unless you have another policy in place that would pay off the balance on your mortgage if you died.
Suppose you want to switch your mortgage at some stage. If you have a mortgage protection policy through your existing lender, they will cancel the policy when you transfer your mortgage. So, you will have to apply for cover again. As you are older, it will usually cost you more. And, if you are not in good health, you will have to pay an even higher premium or you may not be able to get cover at all. If you have your own mortgage protection policy, you can simply transfer it to a new lender.
When a lender tells you to get a life insurance policy they usually mean mortgage protection. You see Mortgage protection is a form of life insurance. Its important to realize you don’t need a mortgage protection and a life insurance policy to cover your loan you need one or the other.
