How to save money when taking out Mortgage Protection Cover
1. Use a broker.
While your bank will recommend mortgage protection cover from their tied provider, keep in mind that you have the choice to explore other insurance options. All the main banks in Ireland operate as tied agents this means that they only offer one companies policies. Remember you dont have to take their plan and they cannot decline you for the mortgage if you opt to go elsewhere.
Contact Ferris Financial Planning and we will get quotes from different insurance providers and we can help you find coverage that better suits your needs and budget.
2. Quit Smoking.
All Insurance companies offer lower prices to non-smokers as they pose lower health risks. To qualify as a non-smoker, most insurance companies require you to have not smoked cigarettes or nicotine replacement products ( yes if you vape you are a smoker ) for a specified period, typically around 12 months. Being a non-smoker means, you can enjoy more cheaper cover for your mortgage protection cover and any other related cover.
3. Take out a Dual Life Plan
It is only recently that all the main life companies in Ireland have started to offer Dual Life Mortgage Cover….now that they have I cannot think of a single reason you would take out Joint Life Mortgage Cover instead of Dual Life Mortgage Protection.
Joint Life Cover: With joint life mortgage cover, both partners or spouses are covered under a single life insurance policy. This policy typically pays out once, usually upon the death of the first policyholder. The policy is designed to pay back the mortgage and cover will reduce in line with the mortgage. Plan will end after first death.
Dual Life Cover: With Dual life mortgage cover, both partners or spouses are covered under a single life insurance policy. This policy can pays out twice, once upon the death of the first policyholder and again if second policyholder dies. The policy is designed to pay back the mortgage and cover will reduce in line with the mortgage. Plan will continue after first death and as mortgage will be gone if the second person died the second payout can be left for dependants. At present Dual Life and Joint Life plans are almost identical in cost why not have 2 pay-outs vs 1.
4. Take out decreasing cover to cover the loan.
Use mortgage cover to protect the mortgage only don’t be tempted to go with Level Cover to protect your mortgage. If you feel you need cover for your family take out a decreasing plan to cover the debt and a separate level term plan to protect your family.
Level cover may sound great but lets say you borrow 250K over 25 years and opt for level cover. Thinking hey if I die 250K is paid out and the balance will protect my partner and kids. What would happen if you died in 6 months. Hopefully you don’t but you never know. In this case the bank is owed probably 245K – 250K is paid out and your partner gets 5K.
I get it if you died in 24 years your partner would get 250K and the mortgage might even be gone by then. But the big worry is in the early years. If you think your partner and kids need protected. Take out a basic decreasing Dual Life mortgage plan and set up a separate family plan on the side. This way the basic plan pays off the mortgage and then you always have the separate family cover on top of having the mortgage paid off.
5. Maintain good health.
When you apply for cover you will be required to answer medical questions. Just like smoking above adds to the cost the other more common reasons for the initial price increasing are as follows: High Blood Pressure / High Cholesterol / Your BMI (height vs weight) and family history.
Even if you have mortgage protection in place already you are free to move plans if you can find better value. If you quit smoking, maybe you paid off a large section of the mortgage and you want to reduce cover. Maybe you just found a better price. A new plan can be set up and the old plan cancelled.
Happy to discuss
R
