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Life insurance payout and mortgage

  • 26-03-2019 2:44pm
    #1
    alanmc
    Registered Users, Registered Users 2 Posts: 1,139 ✭✭✭


    Hi,

    How do Life insurance payouts work in the case of a payout based on Critical Illness?
    Is one obliged to pay the mortgage off? Or could one keep the money for when the illness gets bad and working becomes an impossibility?

    Thanks,
    Al.


Comments

  • #2
    Henry Ford III
    Moderators, Business & Finance Moderators Posts: 17,727 Mod ✭✭✭✭Henry Ford III


    If the policy is assigned the lender will be the payee of any claim.

    For this reason there's a strong argument in favour of providing a lender a simple mortgage protection policy and keeping any additional cover separate.


  • #3
    Trish56
    Registered Users, Registered Users 2 Posts: 1,256 ✭✭✭Trish56


    Depends on if you have a separate serious illness policy to the mortgage protection cover. If separate you use as you want and if included with the protection cover and assigned to the lender the proceeds will be paid to the lender. Not sure if the lender would pay you the serious illness payment as the condition of loan offer would only look for payment on death so best bet would be check with the Life Company and also check if you have stand alone serious illness cover or accelerated serious illness cover.


  • #4
    ANXIOUS
    Registered Users, Registered Users 2 Posts: 3,095 ✭✭✭ANXIOUS


    alanmc wrote: »
    Hi,

    How do Life insurance payouts work in the case of a payout based on Critical Illness?
    Is one obliged to pay the mortgage off? Or could one keep the money for when the illness gets bad and working becomes an impossibility?

    Thanks,
    Al.


    Every case is different, even if it is assigned you can get it on some instances. Just call them.


  • #5
    alanmc
    Registered Users, Registered Users 2 Posts: 1,139 ✭✭✭alanmc


    Thanaks for all the replies.


    So if they're issuing the payment directly to the policy holder, would they be obliged to use the proceeds to pay off the mortgage, or is it at their discretion? In other words, can the bank come looking for the mortgage to be paid off now that there is no longer any payment protection on the loan?


  • #6
    ANXIOUS
    Registered Users, Registered Users 2 Posts: 3,095 ✭✭✭ANXIOUS


    alanmc wrote: »
    Thanaks for all the replies.


    So if they're issuing the payment directly to the policy holder, would they be obliged to use the proceeds to pay off the mortgage, or is it at their discretion? In other words, can the bank come looking for the mortgage to be paid off now that there is no longer any payment protection on the loan?

    Payment protection as you phrased it isn't needed to draw down a mortgage. So they never needed it.

    Is it a insurance company linked to the mortgage bank? Ie ark and aib


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  • #7
    alanmc
    Registered Users, Registered Users 2 Posts: 1,139 ✭✭✭alanmc


    ANXIOUS wrote: »
    Payment protection as you phrased it isn't needed to draw down a mortgage. So they never needed it.

    Is it a insurance company linked to the mortgage bank? Ie ark and aib

    Don't think so. Mortgage is with AIB. Life Insurance is with Irish Life.


  • #8
    ANXIOUS
    Registered Users, Registered Users 2 Posts: 3,095 ✭✭✭ANXIOUS


    alanmc wrote: »
    Don't think so. Mortgage is with AIB. Life Insurance is with Irish Life.

    They are tied agents, is it a recent enough mortgage?


  • #9
    alanmc
    Registered Users, Registered Users 2 Posts: 1,139 ✭✭✭alanmc


    ANXIOUS wrote: »
    They are tied agents, is it a recent enough mortgage?

    2010.


  • #10
    ANXIOUS
    Registered Users, Registered Users 2 Posts: 3,095 ✭✭✭ANXIOUS


    alanmc wrote: »
    2010.

    Ya, sounds about right after they sold off their own insurance crowd.

    Have you engaged with them yet?


  • #11
    alanmc
    Registered Users, Registered Users 2 Posts: 1,139 ✭✭✭alanmc


    AIB, no. Irish Life have made payment. I just need to figure out if I need to engage with AIB or not.

    I guess I should anyway.

    Thanks all (especially ANXIOUS) for answering my queries.


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  • #12
    ANXIOUS
    Registered Users, Registered Users 2 Posts: 3,095 ✭✭✭ANXIOUS


    alanmc wrote: »
    AIB, no. Irish Life have made payment. I just need to figure out if I need to engage with AIB or not.

    I guess I should anyway.

    Thanks all (especially ANXIOUS) for answering my queries.

    Be very matter of fact with AIB from the beginning, ie when I took out this policy the advisor assured me that the serious illness element would be paid out to me to allow me access to funds to assist with my change in circumstances.


  • #13
    alanmc
    Registered Users, Registered Users 2 Posts: 1,139 ✭✭✭alanmc


    ANXIOUS wrote: »
    Be very matter of fact with AIB from the beginning, ie when I took out this policy the advisor assured me that the serious illness element would be paid out to me to allow me access to funds to assist with my change in circumstances.

    Absolutely. I intend to. Thanks again.


  • #14
    Henry Ford III
    Moderators, Business & Finance Moderators Posts: 17,727 Mod ✭✭✭✭Henry Ford III


    If the policy is assigned and the S.I. element is "accelerated" I think it's unlikely that the lender would allow the benefit be paid out to the insured.

    It is after all a partial payment of the total sum assured, which is their security.

    It'd make absolutely no difference claiming "the advisor told me........".


  • #15
    ANXIOUS
    Registered Users, Registered Users 2 Posts: 3,095 ✭✭✭ANXIOUS


    Henry Ford III wrote: »
    If the policy is assigned and the S.I. element is "accelerated" I think it's unlikely that the lender would allow the benefit be paid out to the insured.

    It is after all a partial payment of the total sum assured, which is their security.

    It'd make absolutely no difference claiming "the advisor told me........".


    Have a read of decision ref 2018-0124, case was won due to a failure to advise on key product / service features.


  • #16
    Henry Ford III
    Moderators, Business & Finance Moderators Posts: 17,727 Mod ✭✭✭✭Henry Ford III


    ANXIOUS wrote: »
    Have a read of decision ref 2018-0124, case was won due to a failure to advise on key product / service features.

    So you are suggesting that this policy was missold? Wow that's quite a leap considering how little you know about the case.

    Well done - you are an inspiration.


  • #17
    ANXIOUS
    Registered Users, Registered Users 2 Posts: 3,095 ✭✭✭ANXIOUS


    Henry Ford III wrote: »
    So you are suggesting that this policy was missold? Wow that's quite a leap considering how little you know about the case.

    Well done - you are an inspiration.

    Where did I say that?

    You said "it'd make absolutely no difference claiming" the advisor told me........ ""

    Where that case shows that a failure to advise on a key product or service feature is grounds for a successful complaint.


  • #18
    Trish56
    Registered Users, Registered Users 2 Posts: 1,256 ✭✭✭Trish56


    Just wondering if you're confused here - It would have been a condition of loan offer that you take out a Mortgage Protection Policy and normally this is assigned to the lender and is only payable on death. A Payment Protection policy helps pay your monthly mortgage repayment in the event of illness, accident or redundancy. Serious illness is a payment made if diagnosed with a specific serious illness.

    So what you need to establish from the Irish Life is : Do you still hold Mortgage Protection cover in the event of your death or did you have an Accelerated Mortgage Protection Policy and you now have no cover. If you still have Mortgage Protection cover for the balance o/s on your mortgage then you are entitled to keep the full proceeds of the pay out from the Serious Illness cover and you do not need to discuss with your lender.


    alanmc wrote: »
    Thanaks for all the replies.


    So if they're issuing the payment directly to the policy holder, would they be obliged to use the proceeds to pay off the mortgage, or is it at their discretion? In other words, can the bank come looking for the mortgage to be paid off now that there is no longer any payment protection on the loan?


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