Really silly question.

from_atozinc

Hello,

I am actually embarrassed to be asking this question. Have never had a mortgage.

Can someone tell me without any jargon what insurance I need from a personal point of view. Is the term just simply called "Life Insurance" ? And does it simply mean that if I die suddenly that my next of kin gets some money?

Is there also Life ASSurance?

Sorry about the basic questions.

Lumina

I believe it is called 'mortgage life insurance' or 'mortgage protection'. This means the house is paid off on one of the named policyholders deaths.

Life assurance is different.

HeidiHeidi

Not a silly question at all - it's a flipping minefield!

My understanding is that the bank that lends you the money will require you to insure yourself for that amount (mortgage protection), so that if you die they won't be forced to sell the property from under your remaining family in order to recoup their money. That's it at its simplest. It's a guarantee for the lending bank.

Life assurance is you insuring your life so that if you die your policy will pay out x amount to your next of kin.

from_atozinc

HeidiHeidi wrote: »

Not a silly question at all - it's a flipping minefield!

My understanding is that the bank that lends you the money will require you to insure yourself for that amount (mortgage protection), so that if you die they won't be forced to sell the property from under your remaining family in order to recoup their money. That's it at its simplest. It's a guarantee for the lending bank.

Life assurance is you insuring your life so that if you die your policy will pay out x amount to your next of kin.

Than you Heidi. So you only need mortgage protection if you take out a mortgage.

I'm more interested in the Life ASSurance. I have 2 kids and a wife and don't have this : / Amd I am 37

Because I'm so late starting does that mean if I die, that the wife and 2 kids will get feck all of a payout. I'm not thinking I'm going to get hit by a car tomorrow, but essentially if I did, they get nothing. Which I just came to a sudden realisation earlier.

Is the amount of payout based on

your salary ?
how much you pay in to it ?
how long you have been paying in to it ?
none of the above etc ?

HeidiHeidi

from_atozinc wrote: »

Than you Heidi. So you only need mortgage protection if you take out a mortgage.

I'm more interested in the Life ASSurance. I have 2 kids and a wife and don't have this : / Amd I am 37

Because I'm so late starting does that mean if I die, that the wife and 2 kids will get feck all of a payout. I'm not thinking I'm going to get hit by a car tomorrow, but essentially if I did, they get nothing. Which I just came to a sudden realisation earlier.

Is the amount of payout based on

your salary ?
how much you pay in to it ?
how long you have been paying in to it ?
none of the above etc ?

I'm sure there will be people along who'll be far more au fait with all this than me (I have no dependents so haven't bothered with anything other than the compulsory mortgage protection!) - but I'm guessing that you pick an amount that you'd like to be paid out on your death, and depending on your age/health/smoker/drinker etc then your premium will vary.

Joe Duffy's Liveline has been rife with this lately - he and his callers are busy conflating criitcal illness insurance with life assurance and causing/stirring all sorts of confusion in the process. Your best bet is to find an independent insurance broker and ask their advice IMO.

JTMan

The only mandatory insurance, unless you are over 55, if life insurance for the term of the mortgage.

There are optional expensive other insurances such as income protection.

Shop around for life insurance. I recently switched to Royal London and I am now paying 21 EUR a month on a large mortgage. LA Brokers and Bonkers are 2 good sites to view different life insurance packages. Don't just go with the policy sold by your mortgage provider.

from_atozinc

Hi. Thanks all.

Is it broken up in to

Life insurance with a mortgage for a term
Life insurance without a mortgage for a term
ASSurance

phormium

They are really all the same in what they do, you insure your life for a set length of time, it's either attached to a mortgage or not. If not, then the payout goes to whoever is left, if attached to mortgage payout goes to lender.

Within the description of life/mortgage/insurance/assurance there is lots of variety and levels of policies with various add ons etc. It's like just saying there is bread in a bread shop, there is, but there is loads of different types within that one description.

Most basic cover is on your mortgage on a decreasing basis for life only, so basically if you die only what you owe is paid off as the amount insured decreases along with the balance of the mortgage (it's slightly more complicated but only slightly but this is sufficient to know for a start). Therefore if you died with the last payment only due then that is all that would be paid out (approx).

Next step up is level cover which means the sum you insure for is paid out regardless of what is owing on the mortgage, so if you insured for 100k and died on the last mortgage payment then the 100k is still paid out and any surplus after mortgage is cleared goes to your estate (obviously slightly more expensive than decreasing cover but worth looking at the figures anyway)

On to either of these you can usually tack on additional benefits such as critical illness cover, whether that is wise or not is for a good advisor and you to decide.

An insurance policy on your life that is separate to your mortgage can run for any term you like as opposed to one attached to your mortgage which runs for the term of the mortgage. This type is usually taken to provide a lump sum for dependants and may run for example until eldest child is past college age or whatever other term you want. The amount you insure your life for can be an amount of your choosing, there are formulas to work out how much is needed to replace income but a lot of the time it comes down to what you can afford to pay each month. No point advising someone they need 500k of cover if they can only afford 50, some cover is better than none.

And then there is whole of life, I won't get into that as while there is no end term it gets reviewed as you get older, ask the advisor to advise Personally I don't think it's a good deal, it almost always ends up too expensive to continue so not really whole of life at all.

A good advisor will advise the ideal sort of cover you could do with, after that what you can afford will determine which bits of the package you go for.

from_atozinc

Thank you all so far for you comments.

So I am renting at the moment, I do not have a mortgage, but plan to have fairly small mortgage in the next year or 2.
I have a wife who dosent work and 2 children under 3 years old.

I suppose im looking at this from the point of view that if I were to die tomorrow, the wife and 2 kids will have nothing !!! worrying, I know this seems flippant, but I just never actually got round to it.

Can anyone recommend a product or exact insurance that would suit the above needs.

Henry Ford III

from_atozinc wrote: »

Thank you all so far for you comments.

So I am renting at the moment, I do not have a mortgage, but plan to have fairly small mortgage in the next year or 2.
I have a wife who dosent work and 2 children under 3 years old.

I suppose im looking at this from the point of view that if I were to die tomorrow, the wife and 2 kids will have nothing !!! worrying, I know this seems flippant, but I just never actually got round to it.

Can anyone recommend a product or exact insurance that would suit the above needs.

Give the lender the minimum. A cheap mortgage protection policy.

Effect separate cover for your family.

As always get proper professional and independent advice.

tatumkelly

from_atozinc wrote: »

Thank you all so far for you comments.

So I am renting at the moment, I do not have a mortgage, but plan to have fairly small mortgage in the next year or 2.
I have a wife who dosent work and 2 children under 3 years old.

I suppose im looking at this from the point of view that if I were to die tomorrow, the wife and 2 kids will have nothing !!! worrying, I know this seems flippant, but I just never actually got round to it.

Can anyone recommend a product or exact insurance that would suit the above needs.

Without knowing your overall personal circumstances, it looks like you need a straight forward life policy ie. sum assured is calculated by looking at financial loss in the event of death of you or your wife, age of children will be taken into account (assuming you would like them to be looked after until they finish their education)

Life cover is pretty inexpensive if you have no medical issues and do not smoke.

Henry Ford III

tatumkelly wrote: »

Without knowing your overall personal circumstances, it looks like you need a straight forward life policy ie. sum assured is calculated by looking at financial loss in the event of death of you or your wife, age of children will be taken into account (assuming you would like them to be looked after until they finish their education)

Life cover is pretty inexpensive if you have no medical issues and do not smoke.

....and you are relatively young.

tatumkelly

Henry Ford III wrote: »

....and you are relatively young.

Very true. The rates do increase significantly as you age. At 37, the OP should be fine.

Assuming his wife is also 37, n/s and healthy, the OP could take out €250k dual life cover (with the option to extend the cover at any time without the need for medical underwriting) for 20 years for only €39 per month.

from_atozinc

tatumkelly wrote: »

Very true. The rates do increase significantly as you age. At 37, the OP should be fine.

Assuming his wife is also 37, n/s and healthy, the OP could take out €250k dual life cover (with the option to extend the cover at any time without the need for medical underwriting) for 20 years for only €39 per month.

yeah, wife is 37, healthy and non smoker.

could anyone recommend a company to provide this dual cover?

I tried laya life but they only offer cover for individuals.

from_atozinc

this is my first time seeing the term "dual life cover"

A search brought up this:

Dual cover is insurance on two people but a claim can be paid on both deaths. If one person dies, the policy continues in the name of the survivor

So lets say my wife and I are covered for 250k. If I die first, she gets 250k...........and the policy continues.

when she dies, I presume there is another payout of 250k, but who does that go to ? its only my wife and I on the policy.......... and at this point both of us are dead........so where does the dosh go?

tatumkelly

from_atozinc wrote: »

this is my first time seeing the term "dual life cover"

A search brought up this:

Dual cover is insurance on two people but a claim can be paid on both deaths. If one person dies, the policy continues in the name of the survivor

So lets say my wife and I are covered for 250k. If I die first, she gets 250k...........and the policy continues.

when she dies, I presume there is another payout of 250k, but who does that go to ? its only my wife and I on the policy.......... and at this point both of us are dead........so where does the dosh go?

If your wife dies, the second claim of €250k goes to your children or back to your estate (parents/siblings etc).

from_atozinc

tatumkelly wrote: »

If your wife dies, the second claim of €250k goes to your children or back to your estate (parents/siblings etc).

ok, with ya now. thanks.

so is this classed as Life insurance OR assurance.

Seems like I am guaranteed a payout, so is it assurance?

tatumkelly

from_atozinc wrote: »

ok, with ya now. thanks.

so is this classed as Life insurance OR assurance.

Seems like I am guaranteed a payout, so is it assurance?

Life assurance policies were traditionally Whole of Life policies ie. you pay premiums for life, with a guaranteed payout at the end. WoL policies are still available but less popular for a few reasons: mainly they had reviewable rates which means that the monthly premium increased as you aged, and often premiums were no longer affordable, also they are not as flexible as newer Life Insurance products.

Life insurance policies have a fixed term eg. 250k for 20 years. If you don't die within the term of 20 years, the policy ceases* and there is no maturity value/payout.

*You may choose to continue the policy at the end of 20 years (this is available on policies with an option to extend the cover without the need to go through medical underwriting). Some providers will offer cover until age 90.

from_atozinc

tatumkelly wrote: »

Life assurance policies were traditionally Whole of Life policies ie. you pay premiums for life, with a guaranteed payout at the end. WoL policies are still available but less popular for a few reasons: mainly they had reviewable rates which means that the monthly premium increased as you aged, and often premiums were no longer affordable, also they are not as flexible as newer Life Insurance products.

Life insurance policies have a fixed term eg. 250k for 20 years. If you don't die within the term of 20 years, the policy ceases* and there is no maturity value/payout.

*You may choose to continue the policy at the end of 20 years (this is available on policies with an option to extend the cover without the need to go through medical underwriting). Some providers will offer cover until age 90.

thanks, so life assurance is not really that common then.

so I am 37 now, lets say I take out a 25 year term, that brings me up to 62 years old.
if I didn't die during this period, I presume the natural thing is to then try and take out a new policy, would companies just go feck off, your too old or would the monthly cost be very dear at 62 years of age etc ?

tatumkelly

from_atozinc wrote: »

thanks, so life assurance is not really that common then.

so I am 37 now, lets say I take out a 25 year term, that brings me up to 62 years old.
if I didn't die during this period, I presume the natural thing is to then try and take out a new policy, would companies just go feck off, your too old or would the monthly cost be very dear at 62 years of age etc ?

Ok so the 'convertible option' I mentioned is a great feature. Basically it allows you to extend the cover at any time before age 65 without providing medical info.

So say at 55 you get diabetes or cancer, and at 64 you still want cover - You don't have to disclose med problems to the life company and they have to allow you to take out a new policy for 10/15/20 years. The premium will be higher because you are older, but it will be based on you as a healthy 64 year old, rather than a 64 year old with a host of medical problems (which drives up the premium or can lead to a flat out decline to cover you).

johnny_adidas

Tick the specified/critical illness box, you never know what's around the corner!! I am younger than you and just finished treatment, twice, for something that should've killed me.
I don't remember choosing it when I got my mortgage policy about 10 years but my family and I are very glad I did, if even to lessen that burden while unwell

phormium

Serious/critical illness cover is handy if you can afford it, however it is a lot more expensive now than it was 10 yrs ago so will up your premium significantly which is fine if you can afford it.

You need to go to a broker who can advise on which policy/company suits you best for your circumstances.

No point getting bogged down in the terms of insurance/assurance, neither here nor there really, you just must decide what level of cover you want and for how long and what can you afford so a good broker is your best bet.

PokeHerKing

Hi folks,

Just want to jump in here with a slightly off topic question. I have a friend who apparently has no mortgage protection. Claims to have changed mtg providers years ago and stopped paying it.

How is this possible if it's actually insurance for the bank itself?

Cheers

Henry Ford III

PokeHerKing wrote: »

Hi folks,

Just want to jump in here with a slightly off topic question. I have a friend who apparently has no mortgage protection. Claims to have changed mtg providers years ago and stopped paying it.

How is this possible if it's actually insurance for the bank itself?

Cheers

New lender probably was lazy and didn't insist on the assignment of a policy.

They can (and probably should) effect cover for the remaining sum assured (balance of mortgage debt) and term now.

HeidiHeidi

Henry Ford III wrote: »

New lender probably was lazy and didn't insist on the assignment of a policy.

They can (and probably should) effect cover for the remaining sum assured (balance of mortgage debt) and term now.

If it's a family home they most definitely should ensure they have something in place. If the breadwinner (or one of them) dies and the mortgage is unsustainable, the bank are still going to want their money.

Even if it is difficult to repossess a family home (and I think it is, but it happens nonetheless) it'll save a whole world of hurt and hassle if the worst happens.

tatumkelly

PokeHerKing wrote: »

Hi folks,

Just want to jump in here with a slightly off topic question. I have a friend who apparently has no mortgage protection. Claims to have changed mtg providers years ago and stopped paying it.

How is this possible if it's actually insurance for the bank itself?

Cheers

It's surprisingly common. A mortgage provider will only allow you to draw down your mortgage upon receipt of the policy schedule for a life cover policy. This policy is then re-assigned to the lender so if the borrower dies, the bank gets paid directly by the life company.

A lot of people stop paying & cancel the policy mainly to save cash. The life company will let the lender know that the assigned policy has lapsed & the lender will usually write to the borrower a few times to remind them that they are legally obliged to have cover. Borrower ignores letters and take the chance that they die and leave their family with a mortgage to repay/family home ends up being sold. Incredibly irresponsible but common.

Geuze

from_atozinc wrote: »

ok, with ya now. thanks.

so is this classed as Life insurance OR assurance.

Seems like I am guaranteed a payout, so is it assurance?

You are getting bogged down with insurance vs. assurance.

I would ignore that.

All you need to be clear on is the difference between a mortgage protection policy MPP and term life insurance.

When you get the mortgage, buy a simple, cheap MPP for the term of the mortgage.

Do not buy it from a bank, who charge too much.

Buy it from a discount broker. I used www.labrokers.ie, there are others.

You need tern life insurance now, as you have dependents.

You choose the term and the cover, example: 200k, 20 years.

If you die within the 20 years, it pays out 200k.

Joint life = it pays out once, on either spouse

Dual life = it pays out twice

Level cover = 200k fixed for 20 years

Increasing cover means cover and premium inflate each year.