Am I understanding my insurance needs?

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Cheeus

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I have taken time to read through previous posts and would like to make sure I now understand my insurance needs. I'm buying an apt with my partner, the mortgage is based on one salary only. Second salary is temporarily halted due to injury, no other dependents. Hopefully will have at least 1.5 salaries in the near future. My questions are:

1. Is life assurance the same as mortgage protection?
2. Is mortgage income protection extra insurance to cover a case of redundancy?
3. Would life assurance policy cover us both or just the one paying the mortgage (mortgage is in both names)?
4. Would we be better off holding off on income protection for a couple of years. If both out of work wouldn't SW cover interest payments, nearly all of your mortgage in first year or so?
5. Bank is insisting we get contents insurance in addition to the apt block insurance. Could we just insure for really small sum, we estimate that our contents are worth less than 10k?

Am I missing anything - life assurance/mortgage protection, mortgage repayment protection, contents insurance?

Thanks
 
Cheeus said:
1. Is life assurance the same as mortgage protection?
No, similar though. The cover on mortgage protection (MP) decreases in line with the mortgage. Life assurance covers a level amount for the term of the policy. MP is cheaper and is the minimum requirement to drawdown a mortgage.
2. Is mortgage income protection extra insurance to cover a case of redundancy?
Mortgage repayment protection protects against an inability to work for 30+ days due to involuntary redundancy or sickness/disabilty. Pays out for 12 months.(other exclusions apply).
Income protection is a different insurance, this will pay you up to 75% of your salary if you are unable to work due to sickness, injury or disability.
3. Would life assurance policy cover us both or just the one paying the mortgage (mortgage is in both names)?
Depends if it is a joint or single policy. If mortgage is in both names then cover will be in both names so you are both covered.
4. Would we be better off holding off on income protection for a couple of years. If both out of work wouldn't SW cover interest payments, nearly all of your mortgage in first year or so?
Depends on size of mortgage.
5. Bank is insisting we get contents insurance in addition to the apt block insurance. Could we just insure for really small sum, we estimate that our contents are worth less than 10k?
Bank should not be insisting on this, buildings insurance is all that's required.
Click to expand...
 
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1. Is life assurance the same as mortgage protection?

Yes. Mortgage Protection is a form of life assurance.

2. Is mortgage income protection extra insurance to cover a case of redundancy?

Mortgage Repayment Protection will cover illness/accident and redundancy but only pays out for a maximum of one year. Income Protection just covers illness or accident but pays out for far longer.

3. Would life assurance policy cover us both or just the one paying the mortgage (mortgage is in both names)?

Lender is presumably insisting on both lives to be covered on life assurance policy.

4. Would we be better off holding off on income protection for a couple of years. If both out of work wouldn't SW cover interest payments, nearly all of your mortgage in first year or so?

Depends on the size of your mortgage. Social Welfare is currently under €198 per week and that's for those who qualify only.

5. Bank is insisting we get contents insurance in addition to the apt block insurance. Could we just insure for really small sum, we estimate that our contents are worth less than 10k?

Don't know why bank would be insisting on this as it's largely irrelevant to your mortgage. Are they just trying to push you to take out THEIR insurance? Yes you can take out a small contents-only policy.
 
Thanks for the reply. It took me ages to figure out 1 and 2 above!

About SW paying interest on mortgage repayments. I have 2 friends (married couple) who had the misfortune of both being made redundant at the same time. For the period that they were both out of work SW paid the interest on their mortgage. I thought then that mortgage income protection might be pointless in the first year of the mortgage when interest repayments make up the bulk of the mortgage? Particularly as MIP only pays for a year anyway, presumably you'd also have payment redundancy sum to pick up the small shortfall?

Yes, it is strange that bank insists on contents insurance. They insisted at time of initial assessment. I note that it's not included in formal loan conditions received today with loan offer.
 
If they're trying to get you to take their insurance they'll try push the contents with it too I'm sure. You'll get much better house insurance quotes if you don't take their insurance coverage. Have a look at the best buys section.
 
NorfBank said:
If you qualify for SW, will it cover your mortgage repayments?
Click to expand...

That's part of my question. Not the full repayment, but the interest only, where both parties are out of work. Not that I'm planning on it, just wondering if mortgage income protection is worth it in the first year of mortgage.
 
I think I understand.
Hypothetically, you both cannot work and you then turn your mortgage into an interest only mortgage. The SW will then cover those repayments, yes?
What about any other bills you may have? How will those be paid?
Day to day expenses etc.
 
That's more or less my question. Basically what are the advantages of taking out a policy that would protect your mortgage repayments for a year over availing of SW mortgage interest supplement if you were made redundant. http://www.welfare.ie/foi/swa_rentmort.html#2. You wouldn't have to switch to interest only payments, just make up the shortfall yourself.

In the first year of a mortgage would the high portion of interest paid make the need for mortgage protection unnecessary in that SW would pay the interest - the balance in the first year would only be a few hundred euro.

I'm not asking about the feasability of living off SW. Just trying to compare mortgage supplement with mortgage income protection for first year of mortgage as if they were two products.
 
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