Mortgage nearly paid off - can I cancel cover

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NewEdition

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I am lucky enough to have a few thousand remaining on my mortgage.
I have the funds to pay it now if necessary but would rather pay off over the next 6 months.

My mortgage cover / insurance, not life insurance, the basic mandatory covered to secure a mortgage is due in May. Its only €100 per year, but I am thinking I should cancel it.

Can I do this?
What are the repercussions?
If I was to die before the end of the term, the funds are there to pay it anyway.
 
Your mortgage cover is a form of life insurance.

It is independent of the mortgage.

  • If you don't have mortgage cover when you die, you still owe the money
  • If you die with mortgage cover, but don't have the mortgage, your estate still collects on the life cover.
If you cancel it, nothing will happen. You might get a system generated letter from the lender.

But check what cover you are getting for your €100. It might be worth keeping.

Brendan
 
That sounds extraordinarily good value for life assurance so I agree with Brendan that you might consider keeping it.
 
No.. ita not life insurance, I think its referrd to as mortgage protection.
Sounds like I dont need it.
 
You need to find out what cover you are getting.

I would still think that it pays out when you die.

But it might pay out if your income falls.

Brendan
 
If it's money that is paid out when you die then that is life insurance by just another name, mortgage protection just means it was taken out for the purpose of covering a mortgage. As Brendan says check the cover, it's more than likely decreasing so may not have not have much value other than outstanding mortgage and if you don't want to be paying for it based on the fact that you have the money to clear the mortgage if the worst happens then cancel away.

Might need a letter of 'no further interest' from bank though if it's assigned to them, although I recently discovered that one insurance company had done away with that requirement and I was able to cancel an assigned policy no problem.
 
I cancelled my policy a few years ago due to the fact it was very low and while I got a 'reminder' from the insurance company I just ignored it.
 
The payout on a policy that costs €100 per annum is going to be minimal.

Would breaking a condition of the loan contract (to pay the premiums on an assigned life policy) trigger a “black mark” on the bank’s system?

I’ve no idea but I wouldn’t risk it for €100.

Just pay off the mortgage and cancel the DD to the life company.
 
People should take life insurance cover that is related to their income and family status:
  • Do get cover if your death would leave your dependents with financial hardship
  • Don't get cover if you don't have dependents, or if they would be well off in your absence

The level of your outstanding mortgage is one factor in these calculations, but there will generally be more important ones.
 
Brendan is right in what he said.

Initially I borrowed €230K and had cover for €230K. As I paid lump sum, my o/s amount was reduced to €100K however the cover still remains at much higher amount than the o/s loan. in the case of claim, the cover will 1st be used to pay the o/s loan of €100K and the balance will be paid to the other spouse.

I also have an option to reduce my cover from €200K to €100K (in line with the o/s loan amount) but I have left that as it is as there will be a lump sum paid to the OH in the case of claim.

So, you aren't wasting your €100 p/a. The cover will be treated as your life cover (as Brendan said) as you have fully paid of your mortgage. I learnt all this in the last couple of weeks when I called the insurance co to reduce the cover.

PS: Congratulations on being Debt Free!
 
Fidgety said:
That sounds extraordinarily good value for life assurance so I agree with Brendan that you might consider keeping it.
Click to expand...
Without details of the level of cover provided, it's a big step to call it "extraordinarily good value"?
 
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