Loaded Mortgage Protection

M

Mcgef

Registered User
Messages
14
I have recently been making enquiries with regard to remortgaging. In the course of my investigations I have discovered that a mortgage protection policy that I had taken out on a previous re-mortgage for €30k was loaded for medical reasons. The reason given was height/weight ratio. I am also a smoker (aged 32 at time of taking out policy). I have been loaded 75% for the life cover and 150% for the serious illness cover! Does this seem excessive? I have been advised by the insurance company that if I change my current mortgage lender I will have to cancel my first existing policy (which covers €111k currently) as it is a group policy attached to the lender I am currently with. I was also advised that the underwriters may not be willing to insure me at all if I am looking for a new policy for the total new mortgage (€160k) so I could be left with no cover and therefore would not be able to remortgage. Can anyone advise me as to the best way to approach this? Where can I find another policy if I do decide to change lender and is it going to cost me a fortune because of the previous loading?
 
Thank you for the advice Clubman. Does anyone have any infomation on how underwriters determine the loading applied?
 
Hi McGef,

Just a couple of points for you. Technically, your new lender is correct in saying that you might have to take out a new policy as your existing one is part of a group policy, however the insurance company that currently provides the group cover may provide you with a seperate, stand alone policy without too much difficulty.

In the event that you do have to move from one life assurance company to another - if one has already provided you with cover, albeit loaded/rated, then you should have no problem in getting cover from another. In the highly unlikely event that absolutely no life assurance company in the country will insure you, you can always ask your new lender to allow you to sign a life cover waiver. Whilst this is far from ideal and is not automatically a right, most lenders will agree to it if you are a) over 50 years of age, b) the property in question is not your family home or most likely in your case - c) you have been heavily rated or declined by all insurance companies. The obvious drawback of this situation is that if you were to die during the mortgage term, your mortgage would not be cleared and the debt would be passed on in full to your estate.

It's not a great position to be in, but I wouldn't worry about it too much... where theres a will, theres a way! Let me know if I can help you with any of it.

Brian.
 
Brian,

Thanks a million for the advice. I'm going to start shopping around for a policy for the full amount for my new lender. It was a customer service rep in my current insurers company who told me that they may not be willing to provide me with a new policy for the €160k, so thats why I am really concerned. I am only 36 now so it seems like this is going to be an issue for me into the future if I am ever going to look to move home or similar. It seems it may be easier to stay with my current lender and just top-up with them and get a policy for the smaller amount that I am going to top-up for. This would mean that I can retain the policy I have for the largest part of my mortgage which is very cheap as I got that before they loaded me (only 3 years previous to the loading by the way). I would be very interested to know why they loaded me so heavily seen as I have never had any illness to warrant it. I know I smoke and the height/weight thing is a problem, but they are loading me as heavily as a diabetic or cancer recoverer. With regard to the waiver, I am single with no dependants so I don't think this is going to be an option.

Mary
 
Hello Mary,

Obviously I don't know your height and weight or medical history, but I know that insurance companies do tend to use scales of acceptable height/weight ratios. They have a table of "ideal" weight for a 32 year old female of your height. If an applicant is too far over this ideal weight, they're likely to be loaded. You say that the reason you were given was your height/weight ratio. Even if this hasn't caused you any health problems in the past, if it goes unchecked there is a statistically high likelihood that it will cause you health problems in the future. The insurance company would apply the loadings based on such statistical evidence, as well as looking at your health history. Smoking increases the risks of several weight-related illnesses also and so increases the statistical likelihood of your being diagnosed with one in the future.

Several of the illnesses covered by a typical specified serious illness policy are heart-related - the height/weight ratio/smoker combination would put you in a higher statistical likelihood group for that, hence the loading.

...and is it going to cost me a fortune because of the previous loading?
Click to expand...

A life assurance company won't load you solely because you've been loaded before. They will investigate why you were loaded before, but their decision today will be based on an assessment of you today. If the risk factors have decreased in the intervening period, they may decide on a lower loading. If the risk factors have been reduced by a sufficient level, a new life assurance company may not load at all.

In any event different life assurance companies may have differing views on the same risk, i.e. may load more or less for the same person.

Hope this is helpful.

Liam D. Ferguson
www.ferga.com
 
You must log in or register to reply here.
Back
Top