Life Unable to afford Life Insurance after Mortgage restructure

Gigint

Registered User
Messages
2
Hi,
We have recently been approved for "3 year interest only" mortgage repayment restructure
We are both unemployed and our social welfare was reduced by 80 euros /week due to declared partial land/house inheritance which is not possible to sell due to multiple inheritees.

We are paying a lot for our life insurance (160 euros/month) connected to mortgage due to declared illness(depression) at mortgage drawdown .Unfortunataly i still currently seeking treatment for this with neutral prognosis.

We can not afford this and contacted life insurer and they stated that this is the best they can do as it was already reduced from 200e/month couple years ago.

Should we just cancel this life policy now and maybe apply elsewhere? Will it breach our "interest only" mortgage contract if we cancel?

Any advice would be greatly appreciated

thanks

G
 
Hi G, That does seem quite a lot for mortgage protection life cover. I can only presume there was a large loading on your side for the depression disclosure. Before going back to your existing insurer, I would try every insurance company on the market for an alternative. Gather as much detail as you can on your illness (what medication you are taking, if you are seeing a therapist etc.). Not all life insurance companies react the same to an illness disclosure and I have often found their decision on loadings to be 'fluid' and underwriters open to persuasion if you can make a strong enough case to them. I have found New Ireland to be good when it comes to medical underwriting. There are also specialist life companies on the market such as Pulse that your broker can try. Best of luck with it.
 
You are already in an arrears position on your mortgage. In terms of maintaining life cover purely to satisfy the terms of the mortgage there is no issue. You have breached your terms by now keeping to the agreed repayment schedule so another breach is irrelevant. However, if you cancel life cover you are taking a risk in the event that something should happen to either of you. This is a difficult decision and one that you need to think carefully about before taking any action.
Definitely shop around for alternative cover and remember that if you are on a standard mortgage protection policy your cover will be reducing annually and as you will be paying interest only the level of cover will not match your outstanding mortgage as time progresses.
 
As you have been suffering from this illness for a number of years now, your premium will probably be even more expensive. Add in the fact that you are 3 years older now and premiums are priced on age.

As 44brendan said, it is a difficult decision to make. €160 a month is a lot when you are both unemployed. But the financial consequences if one of you died would be fairly dire.

Have you asked the life company how much cover they will give you for €x each month?

Steven
www.bluewaterfp.ie
 
Back
Top