Can a mortgage protection policy become a life assurance policy?

J

Jack and Jill

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Good evening

I have a mortgage protection policy for myself which I was obliged to take out when I bought my house.

The mortgage is now paid off. I have asked the insurance company if it is still valid as the mortgage has been paid. They advised me to keep paying each month and that YES I will still be covered in the event of my death even t

I’ve asked them to confirm this in print by post and they are going to do that in the next day or two. They are a well known and reputable Irish company.

So can a mortgage protection policy become a life assurance policy??

J&J
 
Yes.

A MPP is a life policy, that is assigned to the bank.

If you repay the mortgage, the assignment disappears, and the bank no longer have any interest.

This happens all the time.

After I redeemed a mortgage, either the bank or the insurer wrote to me to say that the policy was no longer assigned, but was still in force.

I kept the policy as the premium is low.
 
Thanks for the reply.

The premium is very modest (18 euro per month).

I’d prefer to keep paying if I or those I leave behind would benefit.

J&J
 
Depends what type of mortgage protection policy. If it is a Reducing Term Cover, then you would, probably, be better off terminating the policy. These policies provide good value at the beginning of a mortgage, but become, increasingly, pricey as the amount covered reduces.
Reducing Term means the amount covered is reducing in line with the mortgage liability. So, even though you have paid off your mortgage, the insurance company will continue to reduce the amount covered as if your mortgage was continuing under the original schedule.
 
I’m going to phone the insurance company this afternoon to get the exact benefit year by year. It is a decreasing benefit. The term of the policy is 26 years. It was a 25 year mortgage policy. There’s seven years to go on the 25 year term of the now paid off mortgage. So hopefully I will be able to work out quickly if it’s worthwhile.

J&
 
My view would be to take out a new Policy. There are a few brokers on AAM who do deals on commission. Once the new policy is tsken out, then cancel the old one. The new one should be written where he insures her life and she insured his. Then there are no problems with banks or Revenue.
 
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