Life Life insurance and Mortgage

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wjc

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Have 400k fixed term life insurance which expires in 23 years. Want to get 500k/25 year mortgage and bank are telling me that I will have to get another policy with them. Is there any way of extending term of my existing policy to 25 years and increasing amount to 500k. 41 years of age so will have to go down medicals route if get new policy. Any help appreciated.
 
Two things. Why are you paying for Term Assurance when for a smaller amount extra you could be on a Full Life Assurance Policy. Have you checked the entire market as your lender should not be insisting one of their policies as other Life Assurance companies might be more competitive.

If the mortgage is not for a PPR, you do not have to have any Term of Life Assurance. It is a myth that Assurance is required for Investment Properties.
 
Problem - you have a 23 year policy but want a 25 year mortgage.

Suggest - (a) check if your existing policy has a conversion option and if so use that to extend cover. plus take out a separate policy for €100,000 over 25 years or (b) take out a 23 year mortgage and leave your 23 year policy as it is plus take out another policy for €100k over 23 years.
 
Sumatra said:
Problem - you have a 23 year policy but want a 25 year mortgage.

Suggest - (a) check if your existing policy has a conversion option and if so use that to extend cover. plus take out a separate policy for €100,000 over 25 years or (b) take out a 23 year mortgage and leave your 23 year policy as it is plus take out another policy for €100k over 23 years.
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It can be done but it is entirely at the descretion of the life insurer. Most shouldn't have a problem provided the risk hasn't materially changed i.e. you haven't been diagonosed with something in the last two years. That said, the older you are, the less likely they are to agree to extending the cover in your life i.e. the policy now ends when you are 60 instead of 58 I think.
 
"It can be done but it is entirely at the descretion of the life insurer"

If there is a conversion option then subject to the policy T&C the insured has the option to extend both the sum assured and the term. Insurer discretion doesn't come into it.

"Most shouldn't have a problem provided the risk hasn't materially changed i.e. you haven't been diagonosed with something in the last two years."

Again a health issue would not affect cover if a conversion option can be exercised.

"That said, the older you are, the less likely they are to agree to extending the cover"

Again under a conversion option the insurer cannot refuse to cover you as as they would a healthy person of 41 years of age.

If there is no conversion option then subject to underwriting (a) propose a new policy for a 25 year term and (1) keep existing policy as a form of life assurance because you bought it when you were younger and rates cheaper or (2) look into the possible financial consequences of terminating the existing policy once you have the new policy or (b) reduce the term of your loan to 23 years, keep existing policy and propose a new 23 year policy but only for the difference you need (€100K). Note if your new loan is a repayment type loan then decreasing term assurance (mortgage protection ) is cheaper. In a mortgage context, level cover is usually used to cover an interest only loan.
 
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