Guide To Switching Mortgage Protection Insurance
st Dec 2016 |
Your complete guide to switching Mortgage Protection insurance and what you need to know, to make sure you get the very best deal. The key is to get a fixed discounted price for every year and not to be fooled by year one offers, as you’ll get caught out. Then also look out for full market comparison with added benefits at no extra cost.
WHY – Switch?
The first reason to switch is obvious, to save money of course, but a second reason is to improve on the added benefits.
- Better Price
If you took your policy out through your bank (mortgage lender) when you got your mortgage, they did not compare the market to get you the best price. Whereas if did use a broker, they didn’t offer a fixed price discount, which is now available on-line.
- Better Benefits
Most insurers include free benefits, as part of their mortgage protection policy, but some offer more than others.
So, why not get a better price with more benefits? such as free children’s cover, flexibility to increase cover, on moving, or remortgaging
WHEN – to Switch?
You can switch your policy at any time. If currently paying monthly or yearly, you need to time your new application properly. To do this, return you completed form 1 month before your next mortgage protection premium is due.
Note: If you have a medical condition that originally affected you premium and there is no decline in your health since, then you should still switch. However, if you have had a serious health decline, since taking out your original policy, then you should not switch.
WHAT – to know?
If you have a mortgage, you must have mortgage protection insurance, you know that.
But don’t think it’s just like Car Insurance, or Home Insurance, in that it renews once a year with a new price. Mortgage Protection offers a fixed price for every year of your mortgage term, this is a very important point in understanding how to get best value!
If you think short term, you will get caught out!
One or two online brokers, will offer you a money off deal in year one, but then up the price for every year thereafter, this is not the way to go!
John aged 33 and Mary aged 31 have a 20-year mortgage of €320,000 over 25 years.
Cheapest market price: €26.63 pm the online broker offers a year one deal where you only pay €127.46 for the full year.
Problem is the premium will switch back to €26.63 pm from year two and for every year thereafter.
The total best price over the 25 years: is €127.46 + €26.63 *12 months * 24 years = €7,796.90
Now compare this to John & Mary choosing a fixed price discount broker option for every year:
- Cheapest market price: €26.63 pm
- Apply 20% broker discount: €21.30 pm
The total best price over the 25 years: is 21.30 *12 months * 25 years = €6,390.00
Now, I know what you’re thinking!
What if you go back to the same online discount broker every year, to get the large year one discount by changing the insurer. Well, this is the worst possible idea and here’s why:
- The older you get the higher the premium.
- If your health declines, the switch price will be much higher?
- The broker will only deal with a maximum of 6 insurers and not all insurers will allow this year one discount.
- The insurers who do permit large year one discount, allow it only once, so you can’t keep returning to them.
- These brokers are execution only meaning you don’t get best cover (any advice).
- You would need to complete a new application each time and deal with your bank each time.
WHERE – to get the best deal, when switching mortgage protection.
- An online discount broker that offers full term discount, not just first year.
- An online discount broker that provides advice (avoid execution only brokers).
- An online discount broker that specialises in life insurance is regulated by the Central Bank of Ireland and displays their terms of business on their home page.
HOW – to switch?
- Dig out your copy policy schedule or ring your bank to check the balance remaining on your mortgage.
- Run your online quote, noting you must cover full years, so if you have 18 years and 3 months remaining you must quote for 24 years for your bank to accept the policy. You stop paying the monthly premiums however when you mortgage is cleared by cancelling the policy.
- Confirm your quote and read your cover guide.
- When ready complete your application form, timing it 1 month before reuired start date.
- If you have any ailments, past or present conditions medical conditions, tell the broker up front, so any additional questionnaires can be got out of the way at the same time as completing the application from.
- Advise your broker of the next direct debit date on your existing policy to be replaced, so as the timing of the new policy is correct. Don’t however attempt to cancel your existing policy until you know your new one is ready to go.
- On receipt of your new policy documents in the post bring the original documents to your bank, assign it against your loan and cancel the old policy.
Switching Mortgage Protection – A bit about Onequote.ie
Here at OneQuote.ie, we only recommend the best cover benefits with a guarantee of the lowest fixed market price, for every year of your policy. We are also the only broker, who discount rated policies due to serious long term medical conditions.
We look to make the process simple, by offering instant online quotes with fully displayed and downloadable cover guides, as well as online application forms and apply by phone options.
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