Savings of €635 a year to be made in Mortgage Protection

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 …

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RTE Talking Money on Life Insurance

Back in June (sorry for the delay, we had the recording but didn’t post it!) we did a piece on life insurance and both how and why it matters.

As usual, Jill and Karl didn’t always agree on everything but the need to insure against your greatest risk was universally accepted and how to do it sensibly is really straight forward.

You can catch us again ‘Talking Money’ every Monday on RTE Drivetime at about 18:15.

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RTE Drivetime: ‘Talking Money’ on good versus bad insurance, 2nd March 2015

Talking Money is a segment every Monday on RTE’s Drivetime show where Karl Deeter and Jill Kerby talk about big financial issues. This week it was about insurance, and how to tell the difference between the ‘good’ kind, the ‘bad’ kind and how much each one matters and costs.

This is an important topic because too many people have too much of the wrong type of cover and not enough of the good type.

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What is ‘serious illness’ or ‘specified illness’ cover

Serious illness (sometimes also called specified illness) is a  type of cover that pays out in the event of the life assured experiencing serious ill health. Life assurance policies may offer serious illness cover with life cover or on a stand alone basis separate from the life policy.

Serious Illness cover is also know as Specified Serious Illness, Critical Illness, Living Insurance, Dread Disease Cover. Serious Illness cover provides a tax free capital sum in the event of the insured being diagnosed as suffering from or contracting any of the serious illnesses specified by the particular policy.

The life assured must satisfy the life company that he or she has been medically diagnosed as suffering from or have contracted an illness covered by the policy, before the life company will pay out. Therefore, medical proof must be provided that such an event has happened. Typically you must also survive 14 days from the event occurring.

The serious illnesses specified by the policy will vary from life company to life company and some illnesses may be subject to “specific exclusions”.  Serious …

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Group Mortgage Protection Cover

The housing loan lender is obliged under the Consumer Credit Act 1995, section 126(1) to arrange at least one group or block policy with a life company to cover those borrowers who do not have their own protection cover.

The lender is the legal owner of the policy however the cost of each borrowers cover is passed on to them by means of increasing their loan repayments accordingly. While the lender is obliged to attempt to cover all its housing loan borrowers there are  some exceptions allowed under section 126(2) of the Consumer Credit Act 1995. a: when the house under loan is not intended to be the principle residence of the borrower or their dependants. b: borrowers who are not acceptable to the insurer or would only be acceptable at significantly higher premium rate than normal (i.e. high risk individuals or are in bad health). c: borrowers who are over 50 years of age at time of loan approval. d: borrowers who at the time the loan is made have sufficient life assurance cover that can be assigned to …

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Types of life cover, term assurance and whole of life

Temporary Assurances

Temporary assurances (term assurance) provides life assurance and /or serious illness cover for a fixed period (called the term) usually for a fixed premium. These policies are called temporary because they provide life and serious illness protection cover, when the policy term ends there is no cash pay out and the policy ceases.

The policy pays out a capital sum if the insured event happens, that is death or serious illness. Of course should the policy holder stop paying the premiums the cover will cease. The policy term is from 1 year upwards, typically 30 – 40 years, some life companies have an upper age limit on temporary assurances of 75 – 80 years.

There are five types of temporary Assurance Policies. a: Term Assurance b:  Convertible Term Assurance (CTA) c: Section 785 Assurance d: Family Income benefit (FIB) e: Mortgage Protection (MPP)

Whole of Life Assurances

Whole of life assurance policies have no fixed term, they do not cease at a fixed point in time, they provide cover throughout life. However this cover might not be guaranteed. …

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Lowering mortgage costs by cancelling life policies?

Caution: I am not advising that anybody breaks their mortgage contract, or does this, it’s just an interesting ‘what if’ because we are seeing more people cancelling their life assurance in order to make ends meet.

When you take out a home loan a standard condition is to have a life insurance policy in place and to have it assigned to the lender. This comes about from S126 of the Consumer Credit Act 1995, and while there are some exceptions as listed in S126(2), the majority of home loans have a policy in place.

When you take it out you then get a deed of assignment, meaning you are paying the policy but the bank is actually the beneficiary. In practice, if you die, the bank gets the insurance policy and if there is any money left over afterwards it goes to your estate.

If you went directly to your bank to get a loan chances are that you have the insurance ‘all in’ where you got sold an own-label product and usually this is lumped in with your monthly …

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Interesting Life Assurance statistics

This is based on research from the Broker/Life Assurance industry, so put on your filters, but nonetheless it is interesting.

1 in every 2 adults (1.6 million people) have NO Life cover or protection of any kind, but 9 out of 10 people admit to needing it.

1 in 5 people (360,000 families) are considering taking out life cover in the next 12 months, but most think it is dearer than it is. Engagement is the big issue – almost 60% of people say they are simply not being asked. On the last point, it seems we have some more phone calls to make!

🙂

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Sadly another client died, but we did our job right

Working in this business can be tragic at times, the nature of the industry is that we have seen many businesses and individuals financially ruined, but at least they are alive and well, ‘your health is your wealth’ as the saying goes.

Sometimes however, our customers don’t have that either, and people die. We can’t stop that, and we can’t help make it better in any way for the people affected with the exception of the financial implications.

A client of ours passed away earlier in the month, they had two houses and two mortgages. When we were first dealing with them we stressed the importance of protecting your family from the financial impact death brings, it is the greatest wealth destroyer of all (indeed, the greatest destroyer in general).

Our clients took our advice, covering their mortgages in full and in addition to that a further lump sum on the life of the breadwinner. Taking out this cover was a selfless act, the person who has ultimately …

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