The decision to enter the property market serves as the main factor in Irish people’s decision to purchase life insurance and/or mortgage protection recent research from AA Ireland has found.
In response to an AA Life survey of over 5,000 Irish people, over 70% of those who currently have some form of life cover in place stated that they first purchased cover when buying their first home or apartment. While putting life insurance or mortgage protection in place is required by most banks in order for a mortgage to be approved, AA Life is warning prospective homeowners to shop around and consider the alternatives to avoid overpaying on their cover.
“When you’re going through the process of applying for a mortgage, getting approved and trying to find a property you like, the paperwork seems to be never-ending and accepting your bank’s mortgage protection or home insurance offering can appear like the easiest option,” Arwen Foley, AA Life spokesperson stated. “Unfortunately, taking mortgage protection or home cover from your bank can lead to you paying significantly more than you need to for either policy. Your bank is only too aware of the fact that most people will opt against shopping around because of the stress they are under and, as a result, aren’t in a position where they have to offer you the best price.”
“Whether you’re nearing the end of your mortgage repayments or you’re just starting out on the road to home ownership, taking some time to shop around and compare prices when it comes to mortgage protection can help you save a significant sum over the duration of your mortgage.”
The AA Life survey also found that just under 1 in 5 people either first purchased or opted to increase the value of their life insurance after getting married. Meanwhile, a further 14.52% of those surveyed stated the birth of their first child led them to enter the market for life insurance or increase their existing cover.
“Many people find themselves confused about the difference between mortgage protection and life insurance, and fail to take out additional cover beyond their mortgage protection when they get married or start having children. In the result of a claim any lump sum from a mortgage protection policy is payable directly to your mortgage provider, so when you get married or start a family it’s important to consider purchasing a separate life insurance policy to ensure your loved ones will also be looked after in the result of a sudden loss,” Arwen added.
“As mortgage protection is required for most banks before they will approve a mortgage application it’s unsurprising that the so many people first purchased cover when buying a home. What is worrying, however, is the significant drop off in people purchasing additional cover when they start a family as these families could suddenly find themselves in a very difficult financial situation should one or both parents pass prematurely.
