Can I cancel my AIB-organised Mortgage Protection?

Hello,
While in the midst of a house build a few years ago, my mortgage person in AIB got me some Irish Life mortgage protection. I see now online I can get it for €10 a month cheaper, so would like to switch. I presume there's no issue with switching, is there? They were insistent I have it. I've no dependents or anyone who will need the mortgage paid. It's a very small mortgage in comparison to house value, so whoever does get it will easily sell, clear mortgage and have something after inheritance tax.

Am I ok to just cancel the AIB one and go with the cheaper one? If it's not essential I'd actually prefer to get rid of it and get the insurance that pays the inheritance tax when I die. But in the meantime I'd like to get the cheaper one. It's hard to even log in and see my account as it's not normal Irish Life, it's Irish via AIB so normal Irish Life won't deal with me.

Thanks

Ok I've done a bit of reading since I posted that. This , from lion.ie, was helpful.

It seems I can. just need to figure out how to break up with the AIB one. I've no email from them, don't know policy number etc. I probably got a letter back in 2022....

You can as you've discovered once you replace it with similar, that said if you replaced it with nothing it's doubtful they would do anything anyway. Do you pay it monthly? If so cancel the direct debit, tis quick you'll hear from them then!

Is it paid separately from your mortgage payment?

Take out the replacement policy and then cancel the old one.

A solicitor suggested to me that when buying a house, it's probably a good idea to take out the life cover with the mortgage provider as it removes one thing which might go wrong. And then when everything settles down, shop around for better value.

Thanks for the responses. Yes, it's paid direct debit, into an old bank account that I may just stop putting money into. And yes, paid separately to my mortgage.

If you cancel the insurance nothing will happen. You still remain liable for the mortgage and it has to be cleared from your estate when you pass away.

My own view is that it’s often good to hold on to life insurance taken out when young as it gets more expensive when you get older and impossible when you have had a serious illness.

Just remember you will be a few years older and the new premiums may rise accordingly.

The first post says they can get it €10 cheaper. Mortgage protection premium are unlikely to.rise with age, but the cover will decrease in line with the mortgage balance..

Yeah, I probably should talk to someone about estate planning. I've no life insurance, just mortgage protection. I've no dependents so I guess I'm paying the mortgage protection for whoever gets it, they mortgage will be paid. They'll still have a lot of inheritance tax!

@Khublei

Do you ever want to move house?

I know someone whose ill health has meant no new life cover possible. She’s very glad she held on to her old policy as it will allow her to get a mortgage to trade up a bit.

Back in the day banks used to suggest to people when looking for a mortgage that it would help their case to take out such a policy from the same bank. At some point the Central Bank got wise to this and did a bit of an information campaign advising people that they were free to buy this product from any one they wished. There's a good few options out there from the basic policies to critical illness and level cover options over the lifetime of the mortgage.

Harvard said:

Back in the day banks used to suggest to people when looking for a mortgage that it would help their case to take out such a policy from the same bank.

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It’s a legal obligation for the lender to offer it.

@Dr Strangelove Yes, I might want to move. When you say Life Cover, is that mortgage protection or a more general life insurance policy? Are you saying I need mortgage protection in order to get a new house, so should keep it? That's a good point. I'd probably be downsizing to release a bit of equity. But if work brings me to Dublin I might need mortgage protection alright.

Having or not having mortgage protection life insurance now for your current mortgage has no bearing on getting another mortgage if you move house.

The point about keeping an existing policy whether the one you have or a newer cheaper one is that things change, chances are the policy you took you originally was when you were younger and quite probably no medical issues. As we age things crop up which can affect getting new policies so there can be an advantage to holding on to existing ones should you think you might need it.

Existing policies be they life insurance or mortgage protection can be used for a new mortgage if they suit. They are both more or less the same thing except that most mort prot policies are decreasing amount, they usually only guarantee to pay off the outstanding loan, in other words as I used to explain to people if you died on the last month of a 30 yr mortgage then it will only be paying off a months payment. As that type of protection decreases it may be useless for using for a new mortgage as the amount covered may have decreased too far to cover the new mortgage but that's only if you are a long way into the mortgage and are borrowing more and for longer on the new one.

If you have no health issues then no reason not to take a new cheaper policy and if that position remains then no issue taking out another new one should you change your mortgage to different term/amount but that's crystal ball territory!

Word of warning for anyone else who has gotten mortgage protection from AIB - my policy essentially doesn't exist.

Irish Life have no record of it. AIB have no record of it. They're all very good at giving me a number to call in the other company.
AIB worked with Irish Life until 2023. And now if you ask one they say your policy is with the other.
So I've essentially been paying for cover that doesn't exist. No one in my family would have been able to figure this out if I'd died.

I've just taken the money out of my account and will let this lapse.

Khublei said:

So I've essentially been paying for cover that doesn't exist. No one in my family would have been able to figure this out if I'd died.

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Have they actually confirmed that? If not then make a formal complaint, get a final response letter from them and then take it to the FSPO if necessary.

Ooh interesting. Well, they just all said it's not on their system. I don't have anything in writing that says they've no record of it.

What, if any, documentation do you have relating to this policy or from when you originally took out the mortgage and life insurance?

Have AIB or Irish Life given you any details about it in the meantime, the policy number if nothing else?

Who was the direct debit or standing order payable to? AIB or Irish Life? Has the payee explained where the DD/SO money has been going?

Is there any reference on the DD/SO that might help to track things down?

I'll have to look into all that. Can't find the policy number. Nothing in my emails. But my be in my 'life admin' drawer....
DD was payable to Irish Life. The only email I got from AIB in the meantime was an email to say they're breaking up with Irish Life, and that I'll be dealing with Irish Life in the future. Not sure who the payee is in this instance, but no one has explained where the SO is going to.