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Compulsory insurance with mortgage?????

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  • 13-05-2009 5:15pm
    #1
    Lmnover
    Registered Users Posts: 148 ✭✭


    Hi
    When we took out our mortgage 4 years ago we were advised to go with a firm that offered the first year of life insurance at a discounted rate.

    Since then they have been taking an annual premium out of our account - I just wondered since this life insurance is compulsory with taking out a mortgage (to my understanding) - can you re negotiate this insurance with another company or whether we are stuck for the duration of our mortgage. The premium is 658.00 which is a tough call in current times...

    Any advice would be appreciated......


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    #2
    ferga_com
    Closed Accounts Posts: 159 ✭✭ferga_com


    You can apply for a new policy. Make sure the new one is in force before cancelling the old. Your lender may have to agree to the cancellation of the existing policy if they have an assignment over it, but they should have no objection once you're providing a replacement.

    The rate may be dearer as you're four years older, but you may be able to avail of a discount for the first year again. I'll assume you're still in good health as you will need to apply again.


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    #3
    rainbowtrout
    Registered Users Posts: 15,382 ✭✭✭✭rainbowtrout


    You do have to have life insurance to cover the mortgage in the event of your death etc, it's probably one of the terms and conditions of your mortgage but you can change over and it will probably work out cheaper. Well it did in my experience. I bought my house in 2003 and got my life insurance with the bank, just to save me the hassle of having to sort out yet another mortgage related financial issue at the time. About 3 years ago I changed over to a different insurance company, I rang the bank first of all to check what the story was with cancelling and there was no problem once I did it in writing and once I had taken out insurance with another company which would cover the mortage and the bank were named as an interest on the policy ( not sure if this is the correct term).

    The real saving for me was that the bank's insurance was costing me about €500 a year and by moving it's now costing me €180. So the saving essentially will pay for something like car tax/insurance for the year at no extra cost!


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    #4
    dclare
    Closed Accounts Posts: 27 ✭dclare


    There's nothing to stop you searching for a new policy and switching to paying monthly by direct debit.

    There are a range of discount insurance brokers out there offering discounts off the first years premiums so you could get up to 75% off the first years payments, and then pay monthly after that.

    Try http://www.DiscountInsurance.ie or http://www.123.ie

    I'd agree with previous posters who say that you shouldn't cancel your existing policy until a new one is in place.


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