Health issues and Life cover (mortgage) application

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Leaky1

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This has been touched on a little in threads regarding switching mortgage provider.

It has been mentioned that a potential barrier to switching mortgage provider can be a doubt over whether life cover will be attainable if health circumstances have changed in recent years.

If a persons health has changed, but not to the extent it affects their capacity to work/earn, how likely are they to encounter difficulties in getting life cover? The change in health is undiagnosed for over 5yrs and in that time hasn't impacted on their ability to work/earn with minimal sick absences (2 - 3 days per year max.). Income Protection Insurance was declined within that time frame "for medical reasons" unspecified by the insurer.

1) Would an insurance company decline Life Cover where they have the slightest doubt? I had thought life cover was only interested where a condition would lead to early mortality

2) Would it be beneficial to deal with an insurance broker to see what companies might offer cover?

3) If it came to a point of requiring a waiver from the mortgage bank regarding life cover, do many banks allow waivers?
 
Why is mortgage protection a barrier to switching?

If nothing is changing other than the lender, can you just use the same policy?
 
Using the same policy is likely to be possible in a switching scenario. A comment by Brendan a little while ago re the difficulties people "might" encounter when switching mortgage & reassigning a policy made my mind fastforward to a "what would happen when taking out a new mortgage and policy" scenario.

Sorry, I wasn't very clear at all in my first post. If a person had cover on a mortgage, then sold that property and went to take out a new mortgage on a new property. Would they have trouble getting a policy for the new property based on the health circumstances I mentioned. Could a broker be beneficial?

Apologies for any rambling, it's difficult to review a post while on a phone.
 
Hi Leaky

To start off, when income protection was denied "for medical reasons", you can request a specific reason. They will write to your GP with the exact reasons. In 99% of cases, it is for where you ticked "yes" on the medical questionnaire.

An insurance company will not decline cover for someone having a medical illness. The first thing they will do is increase the premium to reflect the higher level of risk they are taking in going on cover. The illness is not the only factor they look at. I had a very interesting conversation with an underwriter recently about the premium increase for those with arthritis. Arthritis won't kill you but apparently a lot of the medication taken has very bad side effects that can damage you liver and cause other problems. The premium increase can very depending on what medication you are taking.

A broker will not send your application to every life company, it is too time consuming, Mortgage protection policies don't pay enough to do so. They may send your application to one or two providers that they think may have a lower premium increase than others.


Steven
www.bluewaterfp.ie
 
Hi Steven,

I know the Income Continuance Policy refusal could have been appealed and a request made to specify the exact medical grounds. However, the appeal could only be done by the GP who provided the medical history. And that GP refused to "get involved in your paperwork" and advised to "just ask them yourself". Insurance company would only deal with that Gp.

In your opinion then for Mortgage Life Cover, it is more likely a loading would be added to the premium based on the medication being taken rather than the illness itself? It is not a progressive illness. And no medication is being taken continuously for it.
 
If you have a policy and are selling a property you don't in general have to cancel the existing policy, you can usually keep it and use again if needed for another loan. This of course is if it's not one of those block policies which to be honest I though were no longer in use but it seems some lenders still have them.
 
Monbrieta, the amount on the existing policy (reducing cover) is less than €115k. This is lower than the value of the new property (approx €300k)
 
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Leaky1 said:
Hi Steven,

I know the Income Continuance Policy refusal could have been appealed and a request made to specify the exact medical grounds. However, the appeal could only be done by the GP who provided the medical history. And that GP refused to "get involved in your paperwork" and advised to "just ask them yourself". Insurance company would only deal with that Gp.

In your opinion then for Mortgage Life Cover, it is more likely a loading would be added to the premium based on the medication being taken rather than the illness itself? It is not a progressive illness. And no medication is being taken continuously for it.
Click to expand...

In my dealings with life companies, they will write to the GP if requested. You can then get the reason. They will not send the details directly to the applicant (which I have always thought of as odd).

I have no idea on whether there would be a loading or not as I don't know what the illness is. I am not an underwriter either so I can only go on past experience and not the processes they go through in arriving at a decision.

Steven
www.bluewaterfp.ie
 
If it's an option to keep on the policy then I would, just in case you don't get further affordable cover. Even if it's not for the full amount it's better than nothing from the banks point of view and might sway them in favour of a waiver if necessary. Not the mention the added security for yourself.
 
Just a thought:

Other comments on this board have suggested reassigning my current policy to the new mortgage bank, or alternatively reassigning any other policy I may hold.

My current policy is too low for the mortgage I hope to get.

I don't hold any other policy at the minute. However, would it be advisable to approach a broker or insurance company and take out a policy now (prior to taking out a mortgage) for an amount to cover a future mortgage? Say to cover a mortgage of €270,000. Assign the policy to myself (or next of kin, whatever way that happens!) but reassign it to AIB/BOI/etc when mortgage is taken out. This would give me time to shop around for best rate on a policy rather than at a time immediately prior to drawing down to mortgage.
 
Yes of course you can take out a new MPP without having a mortgage and there is no necessity to assign the policy until such time as a new mortgage policy is approved. MPP's do not have to be linked directly to mortgages. There are simply another type of life cover.
 
Thanks Brendan, I'll keep it in mind as an option.
Unfortunately the words "of course" don't apply to my terribly poor knowledge of insurance products(!)
 
Leaky1 said:
Unfortunately the words "of course" don't apply to my terribly poor knowledge of insurance products(!)
Click to expand...
Apologies if my response appeared somewhat pompous Leaky! You have a number of Options re cover required:-
1. Approach your existing insurer for an increase in cover to 270k on your existing policy. You made need an increase in term also if your new mortgage expires later than the existing mortgage.
2. Cancel your existing policy and re-apply for a new policy with your existing or new insurer for the full 270k. You can check out options with various brokers as well as existing insurer.
3. Hold on to your existing policy and take out a new policy for 155k to meet the increase in mortgage.

All of these options can be explored well in advance of taking out the new mortgage.
 
No worries, Brendan. I didn't read it as being pompous at all.
I feel embarrassingly clueless about this stuff. Your help is very much appreciated. It gives me options to work with.
 
And don't cancel existing one until you are sure you are offered another affordable one. Applying for an increase in the existing one will mean underwriting again like a new one so make sure that won't affect the existing policy either.
 
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