Life Insurance incorporated in Mortgage Payments

westendgirlie

My boyfriend got a Mortgage in 2006 with Irish Nationwide. He has 1 monthly mortgage payment which includes life insurance and Tax Relief at Source. I always found this strange as each month I pay my mortgage, pay my life insuarnce and also get a credit into bank accout for tax relief (3 seperate transactions).

It has now come to his attention that he is paying a monthly life insurance of €90 or €1080 per year :eek::eek::eek::eek::eek:. I pay €26, I am older, have a higher mortgage and I smoke!

He has never received correspondence regarding his insurance so he doesn't know what his payments started out as, when they increased etc. This surely can't be common practice, can it?

Pablo Sanchez

If your boyfriend is part of the group life assurance scheme arranged by his lender then that is usually paid with the monthly mortgage payment. Group schemes can be cheaper then him taking out his own policy due to the discount the scheme would get due to its size. Unfortunatly without knowing age, size of mortgage etc its hard to know if he is paying too much.

Have him look at his annual mortgage statment, this will break down each months mortgage payment and detail the premium he is paying for the life cover. If it turns out to be expensive there is nothing stopping him speaking to a financial advisor and getting quotes for an individual policy.

Just ensure that any new policy is in force before cancelling his existing policy.

westendgirlie

He was young and naive! there's a good start.

Got mortgage in 2006 age 24. roughly 160k over 35 (i think) yrs. Gonna search for statement later. Irish Nationwide confirmed his monthly payments as 94 p/m. He has a quote off FBD of 10 p/m BIG difference.

Already told him to put new insurance in place before cancelling, just incase! But thank you for that bit of advice.

Just got a feeling he was mis-sold this policy. I know nothing about group schemes.

phormium

You will probably find out that the policy he took out includes something like serious/critical illness cover, it is the only explanation for the much higher premium than basic life cover.

Pablo Sanchez

Yeah even with critical illness that seems like a huge premium, im sure there must be more than meets the eye to this.

westendgirlie

Can't find any mortgage statements so will get him to request one.

I did find letter from Irish Life dated May 2010. It states they have upgraded his protection plan to cover more specified illnesses.....At No Extra Cost!

He has never had any other correspondence from Irish Life so they have never told him in writing how much policy costs.

ps: broker filled out all the paperwork :rolleyes:

Mad Sausage

Hi,

I had the same problem myself. I got good independence advice from a financial adviser (the chap I used was very good and came out to meet me when it was best for me) who not only saved me money but also got me better cover.

3DataModem

phormium wrote: »

it is the only explanation for the much higher premium than basic life cover.

It also could be a pay-as-you-go type life cover, where the cost decreases with as the balance decreases.

Pablo Sanchez

3DataModem wrote: »

It also could be a pay-as-you-go type life cover, where the cost decreases with as the balance decreases.

To the best of my knowledge no such insurance type exists in the Irish Market anyway, decreasing policies decrease the level of the cover annually but the premium remains the same.

Mad Sausage

I just got a level term policy off a financial adviser that was referred to me by a colleague and it save me a good few € and I got some extra cover.

But by god I still have things I would like to spend my money on! :eek:

coylemj

In the bad old days the building societies effectively forced you to take out mortgage protection insurance with a company nominated by them, this was outlawed a long time ago.

In one case it was discovered that the CEO of one of the building societies was getting massive kickbacks under the counter from the insurance company who paid him commission just like he was an insurance broker.

Given that Michael Fingleton was probably still CEO of the Irish Nationwide when your friend took out that mortgage, I'm not surprised that they were still carrying on at that game. As part of the mortgage application he was probably made to sign a document which included in the small print the fact that he didn't have to take the life assurance they were offering him but he probably didn't notice this.

He is still free to take out a mortgage protection policy with any provider he chooses but he should just be careful in case there is an assumed 12 month renewal on the existing policy. He needs to check when he can break the existing cover so as not to have two parallel policies running for up to 11 months which would be a waste of money.

Mad Sausage

Again I had the same thing, I was only a few weeks into my second renewal of my policy when I changed over. It was explained to me that as I was paying my premium by monthly direct debits I could (and did) change over at no extra cost. Im happy I did as Im saving money and im NOT!!! giving any extra money to the bank that I do not have to:D:D:D:D