When you think about buying your first home, you probably think of the good stuff. Inviting your friends round for a moving-in session. Making plans for a nursery or a dog or an entire clowder of cats, if that’s your thing.
Making a home together with the love of your life.
You’re not going to be thinking about the crap stuff. Buying bits for it in IKEA (truly a tenth circle of hell). The fact it’s not really yours until you pay off your massive loan.
But does anything ruin romantic notions quite like considering what’d happen if one of you died? It’s not exactly the sweet talk relationships are built on.
We’ll start with the first step: you should probably be well on the way to getting a mortgage. Given the current state (in ‘the bleedin’ hack of it’ sense) of the housing market in much of Ireland, you’ll probably be buying with de other half. It may be a matter of convenience. It may not.
You’ll have saved your 10 percent deposit and, if you’re lucky, you’ll have been living in your parents’ house for the last year so that you didn’t have to give up every single fun thing you love.
If you’re unlucky, you’ll have given up every single fun thing you love and you and your other half will be clutching onto the dream of your first home with everything you’ve got.
Once you’ve done all that, you’ll need insurance to seal the deal before your lender will make it all final.
Basically, Mortgage Protection Insurance clears your mortgage if you die. So, if you (or your partner) meet an early, very sad end, your home becomes theirs, debt-free.
If you didn’t have Mortgage Protection, the debt would keep on keepin’ on and there’d only be one of you to pay it off – which, again, given the apocalyptic state of the housing market, would be really, really rough.
Now, the lender won’t actually give you a mortgage without Mortgage Protection, so you’re gonna have to cough up for it, whether you want to or not.
That doesn’t mean you should buy Mortgage Protection Insurance from your lender.
In fact, you probably shouldn’t. Which leads nicely onto question numero uno in this unofficial FAQ.
Don’t buy from your bank for two reasons:
Bank prices are much more expensive as they can only offer you cover from one insurer. PTSB, AIB, KBC and Ulster Bank can only sell Irish Life products. Bank of Ireland are limted to Bank of Ireland Life products. Let’s look at an example to see how much more you’ll pay:
40 year old smoker buying with a 35 year old non smoker. The mortgage is for €335,000 over 25 years. They have no health issues.
I tried to get a quote on the PTSB website but it transferred me straight to the Irish Life portal. They are quoting €82.34 per month for basic joint life mortgage protection.
We can offer superior dual life mortgage protection for €54.66 per month.
Quote Type:Dual Life Mortgage Protection
First Person:Smoker, born on 01/08/1978
Second Person:Non-Smoker, born on 01/08/1983
Cover Amount for First Person:€335,000
Cover Amount for Second Person:€335,000
Paying monthly, over 25 years.
Premium : €54.66
That’s a saving of €8,304 over the life of your policy.
EIGHT THOUSAND THREE HUNDRED AND FOUR EUROS!!!
They might pressure you into it or you might think it’s handy – sure you’re in there already, but think of it like this: what happens if you find a cheaper mortgage somewhere else? If you move lenders, the Mortgage Protection Insurance won’t move with you because the bank will cancel your block policy.
If another bank ends up having a much more competitive deal, you’ll have to reapply for cover and you’ll be older and possibly ‘iller’ – which could seriously hit you in the pocket, and sure mortgages are pricey enough as it is.
If you go with an independent broker, they can compare all available policies on your behalf and you can move your policy with you. Think of it like football and it being a tactical substitution.
It really could end up costing you thousands, so think long and hard before you go the easy route and sign up to Mortgage Protection with your lender.
Most people get a Joint Mortgage Protection policy because it’s the most common. But that doesn’t mean it’s the one you should get.
With a Joint policy, there is one pay-out on the first death. So let’s say you have a heart attack and leave this mortal coil. The bank gets the pay-out, i.e. your mortgage is cleared and your other half gets to keep your home mortgage-free.
With a Dual policy, there are two pay-outs.
So let’s say you die first, because of the heart attack. The mortgage is cleared. Your other half soon passes away from a broken heart, such is their love for you, then your family/dependents/cats get a second pay-out.
Dual Mortgage Protection Insurance used to be much more expensive, but that’s not the case anymore with Royal London (our current reigning champ for the best deal on Mortgage Protection) offering it for the same price as dual life cover.
Sure it just makes sense to go with Dual. Your feline family will be dining on the finest tuna the world can produce for the rest of their luxurious nine lives.
And remember, the banks can’t offer you dual cover.
In short: yes.
If insurance had commandments, number two would be ‘thou shalt always take a conversion option’. (Number one being: ‘thou shalt get insurance with Nick from Lion.ie).
Hand on heart, you’d be bananas not to get a Convertible Mortgage Protection Policy because it lets you:
There’s not much else to say about it, so moving swiftly on!
Emphasis on: shouldn’t.
In some rare cases, the insurer might think the chances of you having to make a claim are too high so they might postpone or decline you.
Every application is assessed by underwriters who’ll consider how likely it’ll be that you’ll follow through with your claim (in hard terms: that you die during your cover). If you’re seriously ill, you could see why the underwriters (and the insurer, by extension) would baulk at you, but I promise this rarely happens.
If you have a minor health issue, you’ll have to complete a medical questionnaire. If you have a serious illness, the insurer will need a doctor’s report. GPs can be a bit slow, so don’t leave this too late as I’ve seen doctor’s reports being eaten by fax machines (remember fax machines?) for weeks or even months, and you don’t want that ruining your chance of buying a house.
If you’re ill, the key is getting prepared early and going to the insurer who’ll be the most sympathetic to your case. Each of six insurers deals with illnesses differently, so get in touch with a sound independent broker (who me? Ahwouldyastop!) and they can match you up with the insurer who’ll get the best deal for you.
You can thank me when you’re giving your other half the cold shoulder after an unmerciful row in IKEA over cushion covers.
Interested in Mortgage Protection Insurance?
Complete this short questionnaire and I’ll arrange your cover for you, it’ll be quicker and easier than doing it yourself.
If you have a couple of questions you’d like me to answer first, call me on 05793 20836 for a quick chinwag.
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