Mortgage Protection & Critical Illness Cover Advice

Lemlin

I was looking for some advice on mortgage protection and critical illness cover. At present, my wife and I (Both under 30, non smokers) are paying €62 a month to New Ireland for €350,000 worth of mortgage protection cover each and €100,000 worth of critical illness cover each. However, I've seen Charlie Weston in the Independent and a number of financial analysts stating that mortgage protection is one of the services that people should be shopping around for as there are alot of providers trying to undercut each other.

This morning, I heard an advertisement for Hello.ie. I went onto their website and got a quote for mortgage protection insurance for €350,000. The offered premium was just under €27 per month. However, when I went and got a quote for what they called "illness cover" of €100,000 for the two of us, the quote for it was €62 a month. That means to get mortgage protection and critical illness cover with Hello.ie would end up costing me €89 so the policy we have with New Ireland is better value.

That said, it got me thinking about the critical illness and if its worth it? It would appear that the mortgage protection cover is relatively cheap but the critical illness cover is pushing up my premium, if Hello.ie's quotes are anything to go by. I contacted New Ireland by email and asked for the price of my policy without the critical illness cover but they stated that they'd need me to contact my advisor to get a new price as "You cannot add or remove benefits for this type of policy. We would have to quote you for a new policy.".

I picked the 100k amount as an advisor for a different company previously told me that the max critical illness amount you should have is about 2 years' salary as, to put it bluntly, after 2 years, you'll generally either be dead and your mortgage protection will pay out, or you'll be back at work. A man I know though is suffering from Parkinson's and has had to give up work. His critical illness cover did not pay out as it said his condition is not critical. What's the point of having it then? I also know there is state support (at least €188 a week) if I did have to give up work through sickness. €188 isn't alot but I would imagine it can be supplemented with other benefits. So is the critical illness really worth the €35 a month I could save by switching to a standalone Mortgage Protection Policy with Hello.ie?

killers1

Lemlin wrote: »

I was looking for some advice on mortgage protection and critical illness cover. At present, my wife and I (Both under 30, non smokers) are paying €62 a month to New Ireland for €350,000 worth of mortgage protection cover each and €100,000 worth of critical illness cover each. However, I've seen Charlie Weston in the Independent and a number of financial analysts stating that mortgage protection is one of the services that people should be shopping around for as there are alot of providers trying to undercut each other.

This morning, I heard an advertisement for Hello.ie. I went onto their website and got a quote for mortgage protection insurance for €350,000. The offered premium was just under €27 per month. However, when I went and got a quote for what they called "illness cover" of €100,000 for the two of us, the quote for it was €62 a month. That means to get mortgage protection and critical illness cover with Hello.ie would end up costing me €89 so the policy we have with New Ireland is better value.

That said, it got me thinking about the critical illness and if its worth it? It would appear that the mortgage protection cover is relatively cheap but the critical illness cover is pushing up my premium, if Hello.ie's quotes are anything to go by. I contacted New Ireland by email and asked for the price of my policy without the critical illness cover but they stated that they'd need me to contact my advisor to get a new price as "You cannot add or remove benefits for this type of policy. We would have to quote you for a new policy.".

I picked the 100k amount as an advisor for a different company previously told me that the max critical illness amount you should have is about 2 years' salary as, to put it bluntly, after 2 years, you'll generally either be dead and your mortgage protection will pay out, or you'll be back at work. A man I know though is suffering from Parkinson's and has had to give up work. His critical illness cover did not pay out as it said his condition is not critical. What's the point of having it then? I also know there is state support (at least €188 a week) if I did have to give up work through sickness. €188 isn't alot but I would imagine it can be supplemented with other benefits. So is the critical illness really worth the €35 a month I could save by switching to a standalone Mortgage Protection Policy with Hello.ie?

You'd be a long time saving €100k @ €35pm! Critical Illness seems like an expensive additional extra until you need to claim on it and then it'll be the best thing you ever took out... 1 in 4 people will get a serious illness before the age of 60 - fact. If it's affordable I'd be inclined to keep it. You can request a list of illnesses cover under the policy from your insurance co. The €188per week is all well and good but not much use to you if you still have a mortgage to pay...

coylemj

Mrs Accounts wrote: »

Critical Illness is expensive until you get sick and you then be grateful for the payout.

I would recommend you talk to an advisor if you are in the southeast Pm and i can recommend someone who call to your home and chat though policies with no pressure to buy

That would be someone who has an incentive to tell you to change to a policy sold by them and they will get a large slice of the first year's premium.

The last thing you do in the OP's case is talk to an insurance broker, the answer will always be to switch.

OP, if both of you are working and you both have decent sick pay schemes at work then the likelihood is that you do not need critical illness cover.

In relation to mortgage protection, remember when shopping around that you only need to cover the outstanding balance and the remainder of the term.

Zulu

Mrs Accounts wrote: »

Critical Illness is expensive until you get sick and you then be grateful for the payout.

One word of warning - read the fine print! A significant amount of cancers aren't covered by "critical illness" cover. I can only assume this extends to other illnesses you, me, and others would consider "critical" (but insurance companies don't).

coylemj

Zulu wrote: »

One word of warning - read the fine print! A significant amount of cancers aren't covered by "critical illness" cover. I can only assume this extends to other illnesses you, me, and others would consider "critical" (but insurance companies don't).

+1 I wasn't going to go into that issue in my post above but since you raised it, it is also worth highlighting that there is a whole heap of exclusions built in to most critical illness policies. Most consumer organisations say that they are extremely bad value for money, just one rung up the ladder from extended warranties!

The fact that most insurance companies do their best to integrate critical illness cover into mortgage protection policies is an illustration of how profitable they are and what's profitable for them is typically bad value for the consumer. Bundling the two also makes it difficult to do a straight comparison between providers as you'd be able to do with something that's pretty straightforward like mortgage protection. I can understand why New Ireland are refusing to unbundle the OP's policy, they know he'll be off the minute they have to quote for mortgage protection alone so they only way they can hold on to him is by refusing to quote the two separately in the hope that he'll do what most people do and just do nothing.

broker2008

There are loads of aspects that you should consider. I could write a long post but there are so many factors so really you should go and get advice. Advice for this year and every thereafter, I give advice every day of my life and lots for free. If it is in someone's interest to keep a policy that they already have rather than a new one, I'll tell them that. I know plenty of advisers that would do the same. These are advisers that have clients who come back year after year and have friends and colleagues referred to them because they are good at what they do. However, it can be tough when someone calls my office or even worse, in person, to ask for advice, take that advice and "go elsewhere" with their business. I have had plenty of critical illness claims paid out over the years and a mere handful turned down - for valid reasons. Some of those claimants are now dead having received lump sums after their successful critical illness claim and then had life insurance payouts paid to their estate following their deaths. Get a referral and get advice. It was a long post in the end.

Liam D Ferguson

coylemj wrote: »

That would be someone who has an incentive to tell you to change to a policy sold by them and they will get a large slice of the first year's premium.

The last thing you do in the OP's case is talk to an insurance broker, the answer will always be to switch.

With respect, this is a lazy and inaccurate generalisation. Most brokers I know are in this business for the long haul. By far and away the biggest source of business for me is referrals from existing clients. So I know that if I screw a client today to make a quick sale, they will inevitably realise it in due course and I've just killed off a possible new branch on the "referral tree" - their friends and family, their friends and family and so on. That's also leaving aside any sense of personal morals or ethics which you conveniently ignore.

There are plenty of professional brokers out there who will happily offer expert advice even if it doesn't result in a fee or a sale every time. Best thing to do is ask around your own circle of friends and family to get a recommendation of one.

killers1

Liam D Ferguson wrote: »

coylemj wrote: »

That would be someone who has an incentive to tell you to change to a policy sold by them and they will get a large slice of the first year's premium.

The last thing you do in the OP's case is talk to an insurance broker, the answer will always be to switch.

With respect, this is a lazy and inaccurate generalisation. Most brokers I know are in this business for the long haul. By far and away the biggest source of business for me is referrals from existing clients. So I know that if I screw a client today to make a quick sale, they will inevitably realise it in due course and I've just killed off a possible new branch on the "referral tree" - their friends and family, their friends and family and so on. That's also leaving aside any sense of personal morals or ethics which you conveniently ignore.

There are plenty of professional brokers out there who will happily offer expert advice even if it doesn't result in a fee or a sale every time. Best thing to do is ask around your own circle of friends and family to get a recommendation of one.

+1 with Liam on this. It's a lazy generalisation often made towards mortgage & insurance brokers. A brokers job is to get the client an appropriate level & type of cover suited to their needs at the cheapest possible premium from the market in the same way a mortgage broker try's to get the client the amount they need at the cheapest possible rate on the market. KBC bank pay double the commission of every other lender to brokers, I haven't placed a mortgage with them for 3 years. We're not all taking such a short sighted view in the business and believe it or not clients needs are paramount because without clients and referrals you've no business.

Liam D Ferguson

Edit.