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What is mortgage protection cover?

Mortgage protection is a type of life assurance. This cover is designed to protect a mortgage repayment. This does not mean the repayments are covered should the owner be unable to pay due to financial difficulties, instead this type of cover will pay the remaining balance of the mortgage should an owner pass away within the term. Mortgage protection is underwritten on a reducing basis which means the amount of life cover will decrease in line with the mortgage repayments. The amount covered and the term remaining on the policy should always be equal to the amount and term remaining on the mortgage. Mortgage protection is a mandatory requirement by banks, however as these policies are underwritten on an individual basis the cost depends on age, term and health status. This can make the policies too expensive or unattainable in some instances. Sadly, for those with a prior cancer diagnosis, this can also mean a policy is heavily loaded (additional premium) or even declined.

What is changing?

Insurance Ireland has announced a new Code of Practice for underwriting mortgage protection insurance for cancer survivors. This updated code – which was published by the Department of Finance on 7th June 2023 – will allow cancer survivors the ‘Right To Be Forgotten’. This means that insurers will disregard a cancer diagnosis where treatment has ended more than 7 years prior to the application or more than 5 years if the applicant was under 18 at the time the treatment ceased. This does not mean that an applicant does not need to disclose a cancer diagnosis, but the cancer diagnosis will not impact on an underwriter’s decision if more than 7 years have passed since treatment has ceased. This is a very positive step which will cover applicants for their principle private residence up to an amount of €500,000. The main life companies in Ireland have all signed up to implement this new code including the following: Acorn Life, Aviva L&P, Irish Life, Laya, New Ireland, Royal London and Zurich Life. Once implemented, this will enhance the underwriting experience for cancer survivors when applying for new mortgage protection cover making the cover affordable and attainable.

What does this mean for you?

If you are currently applying for a mortgage or preparing to apply for a mortgage, then you will need to consider mortgage protection. This can be sought through the bank which is handling your mortgage. However, we would always recommend utilising a broker for this as the broker can go to the market to get the most competitive and best option. There are subtle differences between the underwriting processes, life cover limits, criteria for nurse medicals, etc. between the different providers, and your financial or mortgage broker can support you in this to ensure you get the best deal and cover tailored to your needs.

If you are an existing holder of mortgage protection life insurance who has previously been loaded due to a prior cancer diagnosis then this will also benefit you. Although your current policy will not be updated to reflect the changes in legislation you are in a position to submit a new application and if more than 7 years have passed since your treatment has ceased then your new policy will not be underwritten in the same manner as your current one. It is important to note that you must disclose your cancer diagnosis even if the 7 years have passed, but you will not be declined or loaded because of this past diagnosis.

If you have previously applied for mortgage protection and been declined due to a cancer diagnosis then you may now be in a position to re-apply for cover. If your treatment has finished with more than 7 years then you can apply for cover and will not be declined due to this cancer diagnosis. For many this has been a stumbling block in the provision of a mortgage, and indeed a permanent home. For some, it has meant that a sole mortgage is obtained in the name of a spouse or partner as life cover could not be obtained. This ‘Right To Be Forgotten’ now means that a cancer survivor will not indefinitely be excluded on health grounds. Again, it is important to note the duty of disclosure for life cover applicants. You must always disclose any health or medical issues right up until the point of inception. For more details on this or to arrange a consultation about any services we provide please do not hesitate to get in contact here.