A friend has told me about a deal he says he got with arklife insurance.
The house costs X amount and he got non-reducing mortgage protection insurance for roughly 1% of X per year which is in the similar percentage range I got for my reducing term mortgage protection with LABrokers.ie which was a good deal by the comparisons I did at the time.
At any point during my cover if either me or my partner kicked the bucket the outstanding balance of our mortgage would be paid off and nothing else paid out.
Under normal non-reducing mortgage protection for X amount, X amout would be paid out no matter how much was left on the mortgage. However, my friend assures me that the deal he has will actually pay out the outstanding balance on the mortgage PLUS X if he dies. This would be almost 2X if it happened on the last day of the mortgage. So he says under his deal he is getting pretty much insured for double the amount while paying a similar percentage of the total value of the house that I am paying on mine. For someone that wants to be insured for that amount, this seems like a very good deal - does anyone have any thoughts on or experiences with such a deal?
My friend also has a separate life insurance policy which prompts me to think he may be over insured. The reason I say this is that I thought the best way to approach your insurance cover is to say "right, if I were to keel over I'd want the house paid off and then Z amount paid out to those I leave behind". For me and my partnre Z amount is zero for the time being as we are in our twenties and have no obligations and feel this would be overinsuring ourselves at this present time.
This would lead me to think that the best approach is to get reducing cover mortgage protection to pay off the house, and then a separate life insurance policy that will pay out Z amount. My friend countered this by saying you get better value for the payout on a non-reducing mortgage protection cover as you are locked into a certain rate from the outset, whereas your life insurance policy will get dearer as you get older.
This may well be the case but I feel it leads to being overinsured as take the following example:
Joe says he wants to be covered for the balance of the house which is valued at 400k plus a 500k payout. Joe gets non reducing mortgage protection for 400k and a separate life insurance policy to pay out 500k. Halfway through the mortgage lets say there is 200k left on the mortgage. If Joe were to have an encounter with the grim reaper his 400k mortgage protection cover would pay off the house and a 200k payout, and his life insurance would pay out 500k, meaning Joe is insured for 700k at this time. IMHO Joe walked into broker looking to be covered for 500k and walked out covered for more than that amount. The extra cover isnt free so he has overinsured (as in at any particular point he doesnt really know how much he is insured for withouth checking his mortgage balance) himself and paid for it.
What are peoples thoughts on this? Particularly interested to hear the views of any brokers or people who have similar arrangements. Oh and sorry for the long post
The house costs X amount and he got non-reducing mortgage protection insurance for roughly 1% of X per year which is in the similar percentage range I got for my reducing term mortgage protection with LABrokers.ie which was a good deal by the comparisons I did at the time.
At any point during my cover if either me or my partner kicked the bucket the outstanding balance of our mortgage would be paid off and nothing else paid out.
Under normal non-reducing mortgage protection for X amount, X amout would be paid out no matter how much was left on the mortgage. However, my friend assures me that the deal he has will actually pay out the outstanding balance on the mortgage PLUS X if he dies. This would be almost 2X if it happened on the last day of the mortgage. So he says under his deal he is getting pretty much insured for double the amount while paying a similar percentage of the total value of the house that I am paying on mine. For someone that wants to be insured for that amount, this seems like a very good deal - does anyone have any thoughts on or experiences with such a deal?
My friend also has a separate life insurance policy which prompts me to think he may be over insured. The reason I say this is that I thought the best way to approach your insurance cover is to say "right, if I were to keel over I'd want the house paid off and then Z amount paid out to those I leave behind". For me and my partnre Z amount is zero for the time being as we are in our twenties and have no obligations and feel this would be overinsuring ourselves at this present time.
This would lead me to think that the best approach is to get reducing cover mortgage protection to pay off the house, and then a separate life insurance policy that will pay out Z amount. My friend countered this by saying you get better value for the payout on a non-reducing mortgage protection cover as you are locked into a certain rate from the outset, whereas your life insurance policy will get dearer as you get older.
This may well be the case but I feel it leads to being overinsured as take the following example:
Joe says he wants to be covered for the balance of the house which is valued at 400k plus a 500k payout. Joe gets non reducing mortgage protection for 400k and a separate life insurance policy to pay out 500k. Halfway through the mortgage lets say there is 200k left on the mortgage. If Joe were to have an encounter with the grim reaper his 400k mortgage protection cover would pay off the house and a 200k payout, and his life insurance would pay out 500k, meaning Joe is insured for 700k at this time. IMHO Joe walked into broker looking to be covered for 500k and walked out covered for more than that amount. The extra cover isnt free so he has overinsured (as in at any particular point he doesnt really know how much he is insured for withouth checking his mortgage balance) himself and paid for it.
What are peoples thoughts on this? Particularly interested to hear the views of any brokers or people who have similar arrangements. Oh and sorry for the long post