Mortgage Protection Insurance - bank trying the big sell

Fabio

Hi all,

I know this has probably been done to death here but my spouse and I had a meeting with the bank recently with regards to mortgage protection insurance for a mortgage we will be taking out with them. We figured it would be a quick meeting to tie down basic mortgage protection insurance (life cover as they called it). Turns out they wanted to actually look in to bundling in income-protection, sick-payments etc as part of it.

I get sick pay in work, and income protection through my pension scheme. Spouse doesn't have income protection but does have sick pay. We're not really looking for a big insurance package at the mo, we just need the basic one.

The bank's representative stated they don't work on commission and it was our choice on what we wanted to do but since I indicated that we really only only wanted basic mortgage protection they've been very pushy with us, asking how we'd pay bills if one of us was to be sick and couldn't work and saying that
if we did a policy independently it could slow the process down as we'd need to do the admin ourselves.

Am I missing something? Do we really need more than a basic mortgage protection package? Or is the bank simply trying to upsell?

Trish56

You're entitled to arrange your own mortgage protection policy which is all you need to comply with the condition on your loan offer. If they are not getting commission then the bank must own the Life Company.

You can arrange with a broker who will shop around and get you the best value quote or I believe you can arrange online yourself.

Heres Johnny

Worth weighing up what they can offer. You can still go basic but if they don't offer you all options and let's say you do get sick and out of work long term and they didn't advise you about it they wouldn't be doing their job. It's not a big sell at all.

You can just go with whatever is suitable for you in the end.

odyssey06

Given the level of cover you have independently doesnt make sense to me they are pushing this on you.

If you think you might trade up in few years and are under 40 think about getting higher life cover that has fixed amount.
Basic mortgage protection decreases amount over time. In 10 years you go to trade up you will have to go through medical underwriting again etc

Geuze

Get a quote from www.labrokers.ie

Fabio

odyssey06 wrote: »

Given the level of cover you have independently doesnt make sense to me they are pushing this on you.

If you think you might trade up in few years and are under 40 think about getting higher life cover that has fixed amount.
Basic mortgage protection decreases amount over time. In 10 years you go to trade up you will have to go through medical underwriting again etc

That's a good point too...thanks!

Fabio

odyssey06 wrote: »

Given the level of cover you have independently doesnt make sense to me they are pushing this on you.

If you think you might trade up in few years and are under 40 think about getting higher life cover that has fixed amount.
Basic mortgage protection decreases amount over time. In 10 years you go to trade up you will have to go through medical underwriting again etc

Just to give a few more details which might make it clearer...

They're offering a package for €39 a month which would give my spouse income protection [which she doesn't have], covers the mortgage protection for us both, it wouldn't do much for me considering I have cover through work. Critical illness cover is included on that as well I think.

But then there are terms like "this covers 50% of the gap in life cover". I don't understand those terms - what gap in life cover?! I'm sure ye have all faced this stuff before and been as confused as me .

caff

Similar in that my pension and company covered illness etc.. Just told them straight out no just give me the basic. 13 euro a month on a 160k mortgage

odyssey06

I don't understand the phrase "gap in life cover" either!

For comparison, on LA Brokers, for approximately €30 a month, assuming both parties are 30 year old non-smokers, cover is fixed amount €300,000 for 30 years.
Basis of cover: Joint Life, i.e. the full amount of €300,000 is paid out if one of the insured parties dies during the 30 year term.

I wouldn't take out income protection except in certain circumstances such as one income family (or one of the incomes much higher than the other), and no income protection with employer. That doesn't seem to apply in your case.

Henry Ford III

Get a proper opinion from an independent Professional.

p.s. Banks do get commission. In fact they are obliged disclose it.

phormium

Couple of things here without knowing full story.

Banks do get commission from outside insurance companies, what the advisor probably meant is they are not getting commission personally themselves, their incentive would be the targets they have to achieve.

Are you sure you are getting income protection or are we talking about Mortgage Repayment Protection which seems far more likely for that money. Income Protection would be a lot more expensive I imagine.

The gap they refer to might be that the Critical Illness Cover is only 50% of the amount of the life cover on the basis that if you are unlucky enough to get an illness covered that at least half the mortgage is paid off in the case that there is then only one income. To cover both of you for full amount again would probably cost substantially more.

Take a basic policy from somewhere, shop around, and if you feel you want critical illness cover get a separate policy that pays out to you rather than the bank, now you may choose to pay it into the mortgage in the event of a claim but equally you may want it for something else.

odyssey06

Good summary here for Mortgage Repayment Protection... remember it won't pay out if you are taking voluntary redundancy:
https://www.mortgages.ie/go/insurances/insurance_information/mortgage-repayment-protector

Fabio

phormium wrote: »

Couple of things here without knowing full story.

Banks do get commission from outside insurance companies, what the advisor probably meant is they are not getting commission personally themselves, their incentive would be the targets they have to achieve.

Are you sure you are getting income protection or are we talking about Mortgage Repayment Protection which seems far more likely for that money. Income Protection would be a lot more expensive I imagine.

The gap they refer to might be that the Critical Illness Cover is only 50% of the amount of the life cover on the basis that if you are unlucky enough to get an illness covered that at least half the mortgage is paid off in the case that there is then only one income. To cover both of you for full amount again would probably cost substantially more.

Take a basic policy from somewhere, shop around, and if you feel you want critical illness cover get a separate policy that pays out to you rather than the bank, now you may choose to pay it into the mortgage in the event of a claim but equally you may want it for something else.

That is seriously good advice, thanks.

I've gone and dug out the figures from the form here so maybe this will give you all a fuller picture...

Here's what they're offering for €39 a month....

- Mortgage Protection Insurance for €150,000

- Decreasing life cover benefit for my spouse for €72,000 (none for me though). Maybe the fact it worth half of the mortgage amount is why they say it "covers 50% of the gap in life cover").

- Bill cover for my spouse at €560 a month for up to 2 years (none for me, possibly because I have some income protection at work).

- Specified Illness Cover for both us worth 6 months our net incomes.

No idea if that is decent or not. To be honest, it looks a lot more on the financial review form they send out but when you break it down...

phormium

I'm even more confused now!

How much is the mortgage and are you both named on it?

If so the death cover to be crystal clear should be for the amount and term of the mortgage for both of you, it can be decreasing.

You are saying there is mortgage protection and also 50% life cover for partner? Sounds strange.

Is specified illness cover critical illness cover? 6 months salary is a strange enough way to pick an amount for that I would have thought.

Bills cover? Is this the Mortgage Repayment Protector to cover your mortgage repayments if out of work, usually covers for up to a year excluding first month but this might have changed to 2 yrs for all I know!

Sounds like a strange bundle of random bits of cover.

Fabio

phormium wrote: »

I'm even more confused now!

How much is the mortgage and are you both named on it?

If so the death cover to be crystal clear should be for the amount and term of the mortgage for both of you, it can be decreasing.

You are saying there is mortgage protection and also 50% life cover for partner? Sounds strange.

Is specified illness cover critical illness cover? 6 months salary is a strange enough way to pick an amount for that I would have thought.

Bills cover? Is this the Mortgage Repayment Protector to cover your mortgage repayments if out of work, usually covers for up to a year excluding first month but this might have changed to 2 yrs for all I know!

Sounds like a strange bundle of random bits of cover.

Sorry, wasn't meaning to confuse [although not sure I can say the same amount the insurance company to be honest].

- The mortgage amount is €150,000 and we're both named on it.

- As for the mortgage protection and 50% life cover. I'm not sure, but I think they're saying these are the same things. For example, if I die my wife gets the house and the bank get their mortgage money in full. I think it also pays out half of the mortgage amount on top of that to whoever is left. It's dual-cover in that case I suppose...

- Bill cover was being couched as an income protection policy more than anything else but I suppose it really is just to pay the mortgage. It definitely says it's for 2 years anyway.

BTW - It's the "standard", i.e. cheapest, Irish Life "OnePlan" policy.