Insurances

BlueIsland

Really confused about the insurances you need with mortgage.

a- Mortgage protection
b- home insurance
c- life insurance

I just dont understand each. well particualrly a and b. are they the same insurance or seperate policies? also I have my own life insurance policy with irish life. should i drop this and get a joint one with partner?

tenchi-fan

BlueIsland wrote: »

Really confused about the insurances you need with mortgage.

a- Mortgage protection
b- home insurance
c- life insurance

I just dont understand each. well particualrly a and b. are they the same insurance or seperate policies? also I have my own life insurance policy with irish life. should i drop this and get a joint one with partner?

a. A type of life assurance. Mortgage protection usually refers to life assurance which will pay off your mortgage only if you die. Cover decreases roughly in line with your mortgage and may cease automatically if you pay off your mortgage early. The policy may be owned or assigned to your bank.
You can also get extra benefits as described in c.

b. Home insurance.. refers to house insurance (the building itself and its contents)

c. Life insurance can be basic life cover (as described in a.) It is also possible to get extra benefits such as level term (cover doesn't decrease), specified illness cover, indexation, guaranteed cover, hospital cash or accident benefit. They can also accumulate a cash value depending on the type of the policy

So to answer your question, a and c may be the same thing. b is completely different.

I recommend meeting with a financial adviser before making the decision to cancel any policies, otherwise you could end up paying more.

killers1

BlueIsland wrote: »

Really confused about the insurances you need with mortgage.

a- Mortgage protection
b- home insurance
c- life insurance

I just dont understand each. well particualrly a and b. are they the same insurance or seperate policies? also I have my own life insurance policy with irish life. should i drop this and get a joint one with partner?

There are 2 insurances you are required to have under the Consumer Credit Act when taking out a mortgage & the minimum requirements are:

1. Mortgage Protection
This is a decreasing policy that reduces over time (at a similar rate to your mortgage reducing) which will pay off the mortgage in the event that either of you die.

2. Home Insurance
This policy covers the actual house itself and the Bank insist that the amount the buildings are insured for is no less than the reinstatement sum the Bank's valuer indicates on the valuation form. This is to protect the Bank in the event of the house burning to the ground etc and the policy will be sufficient to rebuild to it's current state. The level of contents cover you take as part of the policy is up to you and of no concern to the Bank.

3. Life Cover
This is generally a policy to provide a lump sum to the surviving party in the event of your death & your needs will depend on your partner's income, whether you have kids etc... This is not required for the mortgage once you have mortgage protection (1) in place. Depending on your family circumstances it may be prudent to have additional life cover e.g. if you have kids etc..

The existing policy you have with Irish Life will only be sufficient for the mortgage if the amount of cover is greater or equal to the loan amount and the term remaining on the policy is greater or equal to the term of the mortgage. I would advise talking to an Independent Financial Advisor prior to cancelling any policies to ensure you are getting the appropriate amount/type of cover to match your needs at the cheapest possible price from the market.

killers1

I'd also point out that as the mortgage is in joint names the bank will insist that both of you have suitable mortgage protection in place..

Pablo Sanchez

tenchi-fan wrote: »

a. A type of life assurance. Mortgage protection usually refers to life assurance which will pay off your mortgage only if you die. Cover decreases roughly in line with your mortgage and may cease automatically if you pay off your mortgage early. The policy may be owned or assigned to your bank.
You can also get extra benefits as described in c.

Mortgage protection also sometimes refers to 'Payment protection insurance' rather then a decreasing life insurance policy. These two can often get confused.

PPI is not obigitory, it promises to pay your mortgage for a year in the event of redundancy or illness. The list of conditions where they do not have to pay on a claim is ususally quite long so make sure to get that fine tooth comb out when your reading your policy documents.

tenchi-fan

Pablo Sanchez wrote: »

Mortgage protection also sometimes refers to 'Payment protection insurance' rather then a decreasing life insurance policy. These two can often get confused.

That's "mortgage repayment protection." The term Mortgage protection is usually avoided because it is confusing, though it's amazing the amount of people who think their €30 per month life assurance policy will compensate them for time out of work.