If you’re on this here blog, I can assume a couple of things:
I can also probably assume you’re a responsible adult – or at the very least, you’re very good at pretending, which as we all know: all the best people are.
Now, there is one thing you need to know.
This one thing is either coming to you too late, or just in the nick of time, depending on whether or not you now own a house.
The banks are great for mortgages, but they’re a rip off when it comes to Mortgage Protection Insurance in Ireland.
They’ll try to force you to buy their Mortgage Protection (a type of Life Insurance that will pay off the rest of your mortgage if you die) because:
You’re basically paying them so they can pay themselves if you die or get sick before you’re done paying off your mortgage.
Yes, it sucks.
No, there’s not a massive amount you can do about it except arm yourself with all the information you can.
Which is why I’m going to talk you through Mortgage Protection, buying it, and assigning it to your bank/lender.
And that’s it, fairly straightforward, ignore the bank if they try to spook you by saying it causes delays if you don’t buy from them. It doesn’t.
As I said above: it’s a type of insurance that pays off the rest of your mortgage if you die. You have to get it if you’re buying a house. You can buy it from the insurer directly, your bank/lender, or a broker who will usually work with all the insurers.
You also have the option of using existing Life Insurance cover (for example, if you already have a policy) as your cover.
To make that crystal clear, your options are:
If you’ve already bought your policy and are wondering about how to actually assign it, I get round to that in a second.
By the way, you can’t use life insurance that you have through work (death in service benefit) for a mortgage.
Yes. Mortgage Protection is a type of Life Insurance that only covers your mortgage to your lender. Life Insurance leaves a tax-free lump sum to your dependents. They could use it to pay for literally anything they want.
A $2,500 human-sized replica mask of your cat, for example.
Is it confusing? 100 percent.
Is it confusing on purpose? 100 per cent.
My two cents? Get Life Insurance and Mortgage Protection. It’s two pay-outs. It won’t break the bank monthly, but it could mean an awful lot to your family down the line.
Think of it like this: A Mortgage Protection payout gives your family a mortgage-free home. A Life Insurance payout gives your family a replacement income. They need both, so you need both.
Yes. Any time you want. It could totally be worth it for a better price or benefits, so seriously: look into it. A few euro in the difference might not seem like much, but take that €5 a month and multiply it out by 12 and then by the length of your actual mortgage (which could be up to 35 years) and you’d be surprised how much it’ll add up to.
Just look at that fiver go. €5 x 12 x 35 = €2,100.
And that’s before we go anywhere near the difference you could save if you wanted to switch your actual mortgage down the line.
And don’t mind your bank if they say that getting Mortgage Protection or assigning an existing Life Insurance policy will delay your mortgage or that they’ll look more favourably on your application if you do what they want.
Remember: It’s all a
They’re trying to scare you into buying their overpriced policy.
Tell them where to go.
Because you already know where you can get the best mortgage protection quotes.
To make it legal.
Otherwise, it’s a bit like two young fellas swearing loyalty by spitting into a handshake. You telling your bank about your existing policy is grand and all, but if anything happens, they want the legal papers to say they get any payout.
Otherwise, all they’ve got is a spitty handshake and no cover.
It’s a bit like giving your bank a gift. You take out the policy and pay the premiums. When you die (no ‘ifs’ here, pal), your bank gets any pay-out.
To assign the policy (or policies if you have taken two single life policies) you need to complete a deed of assignment for each policy,
The deed is a legal document that forms part of your legal pack. It’s written in legalese, which means it’s completely impenetrable to normal people.
You can try reading it, but honestly, you’ll have as much luck taking another crack at Finnegans Wake. At least then you can sound cultured if you pretend you read Joyce’s gibberish.
You have to sign the deed of assignment.
Listen, it’s a bit like Apple’s terms and conditions; everyone ticks the box and nobody has a clue what they agreed to. Have you just sold your soul to a factory wherever iPhones are manufactured? Possibly.
But you’re still gonna have to do it.
The bit you sign is called the Notice of Assignment. You sign it and send it back to your bank along with your mortgage protection certificate.
The bank then sends it to the insurer and the insurer notes the bank as the legal owner of your policy.
Job done*
Now, because the assignment is in effect a legal transaction, the banks don’t let us get involved so it’s up to them to send the necessary documents in a timely fashion to the insurer.
Once it’s with the insurer, we can chase it and give the insurer a bit of a prod if you’re in a rush but until then, our hands are tied.
*That’s how it usually works but each bank may do things differently.
The insurer will assign your policy to the bank, so the bank becomes the owner of your policy and gets any pay-out.
The insurer will send a confirmation of the assignment letter to the bank stating:
“Thank you for your recent Notice of Assignment in respect of the above-numbered policy.
We have noted your interest and confirm that we hold no prior charge on this policy.”
Once the bank has confirmation of the assignment, they’re happy to issue your mortgage cheque.
If you’re buying as a couple we recommend two single life policies to reduce any potential inheritance tax.
Assigning two policies works in the same way as assigning a single policy only you will have to complete a Deed of Assignment for each policy.
Nope.
And just like that, you’ve assigned your policy.
Your TL;DR of tips, once more:
That’s all, folks!
I hope that clears up how to assign a mortgage life insurance policy to a bank. It’s simple, no matter how difficult your bank may try to make it seem.
But if you have any questions, please complete the short form below and I’ll be right back or even better: call me
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