# Mortgage Payment Protection



## daddy1collon (3 Dec 2008)

There was an article in the indo yesterday where John Geraghty and Liam Ferguson were effectively slagging off Mortgage Payment Protection Insurance.

http://www.independent.ie/business/personal-finance/surviving-the-recession/job-loss-cover-1559995.html

In the article there seems to be an underlying annoyance from Geraghty and Ferguson that in the current environment Mortgage Payment Protection Insurance is out-selling products they sell, ie Life Assurance and Income Protection.

In another article in the indo yesterday PIBA and the IBA defend their Mortgage Payment Protection Policies.



Does anyone have any thoughts?


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## LDFerguson (4 Dec 2008)

daddy1collon said:


> In the article there seems to be an underlying annoyance from Geraghty and Ferguson that in the current environment Mortgage Payment Protection Insurance is out-selling products they sell, ie Life Assurance and Income Protection.


 
My reason for criticising the product was clearly stated in the article.  Your suggestion that there's some other motive for criticising this product is simply wrong - if I wanted to sell this product I could, as my firm is a member of PIBA and can sell MPP should I choose.  I choose not to, for the reasons detailed in the article.  

Have you any involvement with MPP policies yourself, daddy1collon?


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## Sober Lark (4 Dec 2008)

It is well recognised that very few people voluntarily approach a broker for _non_ compulsory insurance, but mortgage repayment protection really has the flood gates open. 

When many mention colleagues in similar occupations have been made redundant recently, then you know more than likely if they take out a policy and later try to claim then they will most certainly fail as they will fall into the category of _‘having had reasonable cause to believe their job may be under threat’ _at the time they took out the policy,and as such a claim will not be paid. 

With jobs being lost right, left and centre mortgage payment protection cover is readily perceived as a good idea.  The name of the product actually sells it without the intervention of salespersons. 

In current economic turmoil it’s a real flavour of the month product and an easy sell. The buyers seek comfort. Most don’t understand the claims process and still they buy. 

Stable door?


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## NorthDrum (5 Dec 2008)

Yeh, a sticky one alright.

Suppose the same could be said for geared funds & endowment policies or other products that were brought out at differant stages of the Life industry. The public demand and they get whatever products they want.

Mortgage payment protection is not the ideal policy for all, but its a bit premature to be saying that they definantly wont be paying out if a claim is made. Once these are highlighted to the client I dont see how its bad advice to take up the product.

I do agree that the criteria in which the companies use to conclude who is entitled to a claim are a little vague, but surely the ombudsman could force a claim payout if they were taking the mickey? I assume that this would be the main concern of some brokers reluctant to sell the product?

I have friends whom I have discussed all their ins and outs and what they should and should not have. Given the fact that the have very little disposable income its difficult for them to justify an expensive critical Illness policy (they are both smokers, one of them has serious health issues). One is the main breadwinner and they would be in serious trouble if he got sick or made redundant. He works for a reputable company and isnt actually that worried of redundancy.

I recommended PHI, but the client has their hearts stuck on taking out the mortgage income replacement. The whole Involuntary redundancy thing has really struck a note with the public. Opportunistic at its finest, but thats the nature of any industry. Like in any industry, we can only highlight the advantages and disadvantages of a product and let the consumer decide. That said there is a market for "opportunist" salespeople to take advantage of peoples insecurities!

If I am not meeting a client to discuss the policy I highlight the cost of the product, the limitations medically (if you have a condition before the product taken out, void policy) and that its Involuntary redundancy. I also stress (in bold) that they read through the terms and conditions (I send out the summarised and long winded T.O.B.'s.

Some people incorrectly assume (or badly advised) that this policy covers you in the event of redundancy, which is not the case. It covers you in the event of redundancy *UNDER THE TERMS AND CONDITIONS OF THE POLICY.*


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## harvey (5 Dec 2008)

I do know of 2 successful claims in very recent times. 

Any link to that article, wouldn't mind having a read of it Liam ?


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## Jimbobp (5 Dec 2008)

NorthDrum said:


> Yeh, a sticky one alright.
> 
> Suppose the same could be said for geared funds & endowment policies or other products that were brought out at differant stages of the Life industry. The public demand and they get whatever products they want.
> 
> ...


 
I feel similar about the product Northdrum. We've had massive interest in the policy in the last couple of months but I find myself at pains to explain the limitations of the policy ( I insist on any interested parties to confirm that they have read the policy in full), I believe every policy has merits but my first recommendation is PHI and to try get the client to build an emmergency fund to protect against redundancy - but easier said then done in current environment.


www.powerinsurances.ie


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## LDFerguson (6 Dec 2008)

harvey said:


> I do know of 2 successful claims in very recent times.
> 
> Any link to that article, wouldn't mind having a read of it Liam ?


 
Here you go.


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## harvey (10 Dec 2008)

LDFerguson said:


> Here you go.


 
Thanks. Good article. Although I did notice 2 errors in the article written by Charlie Weston !


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## LDFerguson (10 Dec 2008)

harvey said:


> Thanks. Good article. Although I did notice 2 errors in the article written by Charlie Weston !


 
Don't be coy - do tell!


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## harvey (11 Dec 2008)

LDFerguson said:


> Don't be coy - do tell!


 
I don't think that either La Brokers or ferga.com are authorised advisors ?


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## LDFerguson (12 Dec 2008)

harvey said:


> I don't think that either La Brokers or ferga.com are authorised advisors ?


 
We'll spotted - we certainly aren't - we're a Multi Agency Intermediary firm.


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## MandaC (14 Dec 2008)

The quotes given for the cost of the insurance is very high.


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## GWhy (20 Jan 2009)

The quotes given were the 3rd party quotes given by banks, and they're always the cheapest, I don't think so. 
I'm surprised that as, I assume, a QFA, you are advising people not to take out repayment protection, it would be like advising older people not to avail of the flu jab when winter is approaching. 
Yes some of the products have a long period that you have to cover yourself before they will commence payment, yes, assuming they pay out, but I think the defence that every bodies job is under threat wouldn't stand up in a court of law, we are all going to die, but I never heard that Irish life or Hibernian ETC used that as an excuse to get out of a claim. I think there seems to be a bit of sour grapes or something here.
I would have thought that it would be better for somebody to have some level of protection rather than none, unless you are suggesting that the Insurance Company in question are not trustworthy, and I doubt that you are.


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## Sober Lark (20 Jan 2009)

The policy terms and conditions are what matter and within those terms are get out clauses and within the claims process are get out clauses. I have no problem where people would have bought Mortgage Repayment Protection to cover redundancy a few years ago in the height of the Celtic Tiger but I do have a problem with it being sold in these recessionary times where people are scared and where people are loosing their jobs left right and centre. The product offers a comfort to such individuals and practically sells itself. Add to this some commission hungry intermediaries and other sales persons trying to justify their existence by reaching sales targets and you have a recepe for disaster. One man's fear of misfortune becomes anothers gain.

Have we never learnt from the past? The reputation of our industry has suffered from fiascos of whole of life policies bombing out, unclear serious illness definitions, lack of clarity in life cover / unit linked regular savings products etc. Mark my words that unless someone comes out to lend some clarity to the situation we'll be adding mortgage repayment protection cover to the list.


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## GWhy (21 Jan 2009)

The whole life policies that bombed out were not misunderstood by the purchaser, in most cases the expected returns used were way outside normal expectations, but not regulations, or the agent/broker/direct sales guy couldn't sell the with profit policy cos it was too expensive. 

This kind of stuff will always happen when peoples incomes are commission based and the boss's are untouchable, unscrupulous, and bonus driven all in the name of THE COMPANY, but everybody forgets THE COMPANY will be here long after we're all gone and it doesn't give a damn about anybody just the profit margin.

Insurance sales people always depend on the fear of the unknown or the fear of loss to sell products, the sales people also tend to exaggerate to gain advantage over their opposition and eventually lose sight of what they really should be doing, providing the best service for the punter.

Any chance of any carpet bagging this year???


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## Sober Lark (21 Jan 2009)

Wouldn't agree with you that the whole of life policies were not misunderstood by the purchaser. There were enough examples given of people in their 60's etc were mesmorised by 'review' letters they had received and a great many complained that the policies were no longer affordable. Many with endowment mortgages were also sold whole of life policies with a so called savings element.

All I can do is write directly to the FR regarding Mortgage Repayment Protection policies and I have already done so. 

I concur with your observations and comments in your second and third paragraphs. 

I think info on carpet bagging is only available to AAMs AMEX blue members


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## GWhy (21 Jan 2009)

When I said they hadn't misunderstood the policies, I meant that they understood what was said to them, but in a lot if not most cases, they weren't told the truth, e.g. it would be like giving them a chess board with chess pieces and then playing draughts afterwards.

Now, lets leave it at that, we could go on forever discussing the dodgy characters that call themselves financial advisers for years, switching from WP bonds to trackers, being found out by the regulator, and yet they are still selling insurance.


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## Sober Lark (21 Jan 2009)

"I'm surprised that as, I assume, a QFA, you are advising people not to take out repayment protection"

"sour grapes or something" 

Back on track then GWhy and may I say one welcomes diverse opinions and views that AAM facilitates.

If there is anyone who feels Mortgage repayment protection is a product that should be sold or bought to cover mortgage repayments in the event of redundancy in these times can you please argue your points for or against. I would especially apprecaite also hearing from those who have a detailed knowledge of the product or those who have information on claims paid out on the redundancy aspect of the cover.


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## GWhy (22 Jan 2009)

No sour grapes, just fact, I know an "advisor" who transferred older clients from Standard Life With Profit Bonds to High risk Trackers, his employer was investigated and took almost a year to get things sorted, in the meantime he had moved on to another brokerage, when they heard about his previous life at least they had the balls to fire him, but he then went onto another office and is now out there licensed to sell and advise. The likes of him are problems bubbling away that will eventually explode. Regulator, I don't think so.

As far as redundancy cover, I would never advise anybody not to have cover, I would however advise them to ask as many prudent questions they can think of, surely it would be better to have the cover, have a claim payed out, rather than not have the cover at all. Like all insurance policies life SI, PHI, Fire, PL, fully comp, etc, hopefully they are all a waste of money.

I'm not selling redundancy cover, but anybody who would ask me for advice, I would ask them to ask the questions that you have pointed out, and get the answers in writing, and if they are happy that those answers are satisfactory, then proceed if THEY wish with whoever it was gave them the answers.


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## NorthDrum (21 Apr 2009)

Have done some more research on this product.

I am not satisfied with some of the terms and conditions of the product and have decided to suspend offering the product.

To date I have not actually sold any of these policies. I feel when clients are informed of the terms and conditions they realise that the vagueness of being entitled to a claim leaves alot of room for the Insurance company to invalidate a claim.

I still think there is a market for these kind of products and there are people who will qualify for a successful claim if made redundant.


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## GWhy (22 Apr 2009)

I know things are slow, but you've really been wasting your time or else you have a sad life. (Joking)

Basically you won't be able to sell it if you don't believe it, it won't be hard in present climate to create the fear.

I wonder if Auctioneers ever had these conversations or do they keep their scruples quiet with "let the buyer beware".

Had a conversation with regulator the other day about something completely trivial, but he spoke to me like I was a piece of **** on his shoe. Pity he didn't take similar attitude to Anglo, AIB etc.


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## harvey (26 Apr 2009)

Interesting article in todays ST about MPP. Blacklist of companies that will not get claims paid because there was threat of redundancy in that particular company and deferral of cover increasing from 90 to 120 days.


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## NorthDrum (27 Apr 2009)

harvey said:


> Interesting article in todays ST about MPP. Blacklist of companies that will not get claims paid because there was threat of redundancy in that particular company and deferral of cover increasing from 90 to 120 days.


 
They have also increased the premium on this product . .

If it was simply a case of "we wont cover x and y" it would be fair enough. But to say if "you have reason to believe you may be made redundant" really never sat well with me (or most advisers).

I found discussing this product with people, I was more inclined to mainly highlight the specific terms and conditions that I was not happy with (like one above) and I implored them to read the Terms and conditions. Everybody I discussed this with had reason to believe they would lose their job and everybody chose not to take up the policy.

I think the fincial Ombudsman could find he might have a very busy workload down the road on this product. . .

Its a product better sold in the good times to be honest, when people arent really concerned with losing their jobs. Highlights a good point that many people dont look for these kind of Insurances until it is too late. Kinda like looking for critical Illness cover after being diagnosed with Cancer .. . .


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