Update: Since March 16th 2021, one of our insurers has removed their COVID19 restrictions on mortgage protection policies only. If an insurer has recently postponed your application, I should be able to get your cover. Complete this questionnaire and I’ll check it out for you.
It’s been 12 months since the first case of Covid-19 was confirmed in Ireland.
12 months of the same shite over and over again.
Cases, deaths, cases, deaths, lockdowns 1, 2 and 3, 5ks, 10ks, bubbles.
So I thought I might as well give you an update as to the developments in my little part of the world – life insurance.
tl/dr – not much has changed.
I remember when it all started back in February 2020.
Clients with certain health conditions couldn’t get cover so I put a note on their file to get back to them in 6 months time.
Surely by then, this would have all blown over.
Fast forward to the present day and I’m getting in touch with those clients to sadly report:
“it’s now been 12 months, and nothing has changed, let’s see where we are in 3 months time”
These unfortunate souls who have their mortgage approval in place, and now can’t buy a family home due to factors completely outside their control – an underlying health condition and COVID.
I keep telling them it’ll be fine, it’s just the timing that sucks, everything will be back to normal…eventually.
But will it?
Am I doing them a disservice?
It’s the hope that kills.
We’re all well aware of COVID-19 but why is it having such an effect on mortgage protection and life insurance applications?
Coronavirus (COVID-19) can make anyone ill. But for some people, the risk is higher.
According to the HSE, there are 2 levels of higher risk:
If you fall into this category, then you’re going to struggle to get life insurance or mortgage protection.
Cover is available for people who fall into this group but it depends on the loading/premium increase that the insurer adds to your policy.
Let’s rewind to pre COVID times – hark back to those halcyon days, of hugs, high five’s and happily supping pints on an empty stomach.
Back then, if you had Type 1 Diabetes, for example, you might be looking at an increase in your premium of +175%.
Today, the increase would still be +175% but due to COVID-19, the insurers have pulled back on the risk they are willing to take.
Their underwriting guidelines for Diabetes or any High-Risk condition, they can’t offer cover if the increase will be higher than 150%. Some insurers are draconian and won’t offer cover if the expected loading will be over 100%.
Instead, they are postponing for 6 months / until COVID-19 settles down….whenever that might be
This is why it is so important to know the most sympathetic insurer for your condition. All the insurers are not taking the same approach.
Here’s a sample of High-Risk conditions (from the HSE website)
If you fall into any of the above categories, it’s going to be tricky to get life insurance or mortgage protection. The underwriting for both types of cover is identical.
Not much because they don’t see a problem.
Hear me out.
Insurance underwriting is data-driven. The underwriters have not seen a massive spike in the number of clients they are postponing so they don’t think it’s a big issue. What they’re failing to realise is that they are only seeing data from fully medically underwritten applications that they can postpone or decline after receiving a full application.
They can’t take account of the applications coming through the broker market where the broker is telling the client they won’t be able to get cover due to COVID-19. Every day, I’m crushing the dreams of clients with Type 1 Diabetes or who have a BMI of 40+ but the insurers are not seeing this. And if I’m telling clients not to apply, there are other brokers doing the same things. All this adds up to a lot of people who can’t get cover.
As you may know, mortgage protection is mandatory if you’re getting a mortgage. The banks insist on the security of knowing your loan will be cleared if you die. But there are some exceptions to this rule. I have highlighted the most relevant one for you if you can’t get mortgage protection.
Per the Irish Statute Book:
126.—(1) Subject to the provisions of this section, a mortgage lender shall arrange, through an insurer or an insurance intermediary, a life assurance policy providing, in the event of the death of a borrower before a housing loan made by the mortgage lender has been repaid, for payment of a sum equal to the amount of the principal estimated by the mortgage lender to be outstanding in the year in which the death occurs on the basis that payments have been made by the borrower in accordance with the mortgage, such sum to be employed in repayment of the principal.
(2) Subsection (1) shall apply as respects all housing loans except—
(a) where the house in respect of which the loan is made is, in the mortgage lender’s opinion, not intended for use as the principal residence of the borrower or of his dependants,
(b) loans to persons who belong to a class of persons which would not be acceptable to an insurer, or which would only be acceptable to an insurer at a premium significantly higher than that payable by borrowers generally,
(c) loans to persons who are over 50 years of age at the time the loan is approved,
(d) loans to persons who, at the time the loan is made, have otherwise arranged life assurance, providing for payment of a sum, in the event of death, of not less than the sum referred to in subsection (1).
If you’re unable to get mortgage protection, the bank may offer you a mortgage protection waiver.
This is a document you sign stating that you understand the consequences of not taking out mortgage protection i.e should you pass away, the mortgage repayments will have to be taken on in full by your partner. The waiver is offered at the discretion of the bank so you don’t qualify automatically if you can’t get mortgage protection. The bank will look at the repayment capacity of your partner, their job security, and the loan to value of the mortgage.
No, which I think is unfair but in fairness, it’s the bank that’s insisting you take out cover before they give you a mortgage, not the insurer.
If you can’t get cover, the bank should be forced to offer you a waiver in line with the Consumer Credit Act.
The bank will get your house if you die – surely that’s enough security.
Did you know that mortgage protection isn’t compulsory in the UK?
So why are we so quick to protect the banks in Ireland.
I’d like to see the banking industry do the right thing and loosen up their criteria for granting a waiver to those who can’t get cover due to COVID-19. Hopefully, COVID-19 is nearly over so really it will only be a temporary measure until normality returns and those people affected by COVID19 can get cover.
But until then…
If you have been declined for mortgage protection and can’t buy a family home because of it, you have to cause a ruckus.
Call Joe Duffy.
Contact your local representative.
March the streets!
The revolution starts at dawn.
Failing that, a GoFundMe page seems to be the way to go.
It depends on the insurer, for some it won’t make any difference as they argue:
Therefore the reinsurance companies (the ones who call the shots) are being very cautious about how the vaccination will affect their position.
For others insurers, if someone has been fully vaccinated then they can consider acceptance of higher-risk individuals.
Thankfully no, if you’re in good health, it’s business as usual.
And even if you have a mild underlying health issue, on the assumption it’s not COVID-19 high-risk, then you’ve nothing to worry about.
Yes, we have seen a marked delay in getting cover for clients.
Again, if you have no health issues, you have no worries, you’re looking at 3-5 days to get your cover.
However if the insurer requires a PMAR (medical report from your GP), you could be waiting up to 8 weeks depending on how efficient your GP is / how busy the surgery they work in is. September is traditionally the busiest time of the year for buying houses which have a knock-on effect at the surgeries. Of course, the backlog created by COVID-19 has created the perfect storm.
Backlog + stricter underwriting = huge demand on GPs who are already overworked due to COVID.
Seriously, if you intend to close before the summer, and you have an underlying health issue that may require a GP report, it’s time to get those ducks in a row.
You might think I’m crazy but trust me, as soon as construction starts again, THE WORLD AND HIS WIFE will want to be in their new home before the kids get back to school. It’ll get busier than a queue at a Krispy Kreme drive-thru. Be smart and avoid a stressful Summer by having your mortgage protection arranged well in advance.
If you have Covid-19 symptoms, have been advised to get tested or have been diagnosed with it, you will need to wait until full recovery before you can get cover.
Health care workers are being tested multiple times and can get mortgage protection.
COVID will only affect your life insurance if you are self-isolating, have symptoms or have tested positive.
Yes, life insurance covers you for death due to COVID-19.
No, COVID-19 is not currently classed as a critical illness. You cannot claim for an illness that is not specifically defined in your policy terms and conditions.
Yes, if you are unable to work for any reason for longer than your deferred period, you can make an income protection insurance claim.
If you’re in any way concerned that your health (or the health of a partner) may affect your mortgage protection, please let me help you.
I’ll give it to you in plain English.
And it may not be the news you want to hear, but better to know now so you can prepare than have it sprung on you at the last minute.
Complete this short questionnaire and I’ll be right back.
If you’re lucky enough not to have any health issues but would like some help finding the best cover, I’d love to help, complete this questionnaire.
Thanks for reading this far – it was a long one but I feel it’s worth addressing the relevant questions coming at us thick and fast in relation to this dreaded new illness.
Nick | 05793 20836 | nick @ lion dot ie
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