We were mentioned in an article by Charlie Weston writing in the Independent about mortgage protection. The point was raised (figures supplied by the Competition and Consumer Protection Commission) that savings of up to €635 were possible.
The parts mentioning Irish Mortgage Brokers are what follows next: It’s normally done on a “joint life, first event” basis which means that if two people take out the policy and die simultaneously it only pays out once and the sum is usually engineered to cover only the balance of the loan.
It does this because it’s created as a “decreasing-term” policy, which means the amount it pays out decreases over time, the same as your mortgage does as you pay it.
It has a set term, in line with the mortgage term, according to Karl Deeter of Irish Mortgage Brokers.
So if you take out a mortgage for €250,000 over 25 years then this policy should track it fairly closely, so that if the policy holder or holders die the mortgage is cleared.
Typically, it’s the cheapest type of life insurance because the risk of death increases over time, but the amount paid out decreases.
As well as this, only one life is really being covered even though many couples have this type of insurance.
The problem is that home buyers are tempted to buy mortgage protection insurance off their bank when they take out their mortgage. This is a bad idea as the bank usually only offers a policy from just one insurer that it has a deal with.
The bank will not research the full market for you. This lack of full market research means you might not be getting the best value, Mr Deeter says.
The other big issue is the fact that the cost of mortgage protection has fallen hugely due to people living longer, which means insurers pay out less often.
And there is now more competition in the market.
Sometimes the payment is mixed in with your mortgage payment and this means if you miss mortgage payments that your insurance can lapse too, meaning if a person goes into arrears and then dies, their mortgage might not be paid off.
If you want to save money and get a cheaper policy, your best bet is to contact a broker.