How to Assign Mortgage Protection

How Do You Assign a Mortgage Protection Policy?

1. Buy a mortgage protection policy
2. Complete a Deed  of Assignment (it forms part of your legal pack that the bank sends to your solicitor)
3. Send the completed Notice of Assignment and your policy schedule to the bank.
4. The bank sends the Notice of Assignment and the policy schedule to the insurer.
5. The insurer assigns your policy to the bank and sends a confirmation letter to the bank

And that’s it—fairly straightforward. Ignore the bank if they try to spook you by saying that not buying from them causes delays.

It doesn’t.

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If you’re on this here blog, I can assume a couple of things:

1. you’ve either bought or are buying a house and
2. you’ve either bought or are buying Mortgage Protection or Life Insurance because you have to.

I can also probably assume you’re a responsible adult – or, at the very least, you’re very good at pretending, which, as we all know, all the best people are.

Now, there is one thing you need to know.

Depending on whether or not you now own a house, this one thing is either coming to you too late or just in the nick of time.

The banks are great for mortgages, but they’re a rip-off when it comes to Mortgage Protection Insurance in Ireland.

They’ll try to force you to buy their Mortgage Protection (a type of Life Insurance that will pay off the rest of your mortgage if you die) because:

You’re paying them so they can pay themselves if you die or get sick before you’re done paying off your mortgage.

Yes, it sucks.

No, there’s not much you can do about it except arm yourself with all the information you can.

That’s why I’m going to walk you through buying Mortgage Protection and assigning it to your bank/lender.

What is mortgage protection/life insurance for a mortgage?

As I said above, it’s a type of insurance that clears your mortgage if you die before it is paid off.

It’s mandatory if you’re getting a mortgage.

You can buy it directly from the insurer, your bank/lender, or a broker who usually works with all the insurers.

You can also use existing Life Insurance cover (for example, if you already have a policy) as your cover.

To make that crystal clear, you can buy from:

Mortgage lender/your bank:

• Tied to the bank so they can only sell you their overpriced Mortgage Protection policy.
• Your premium forms part of your mortgage repayments, so it’s hard to see how much you will pay for your policy.
• You know how bankers get slated all the time for being more concerned with lining their own pockets? Yes. That. Think about it.
• If you have a health issue and they can’t offer you cover, then you’re on your own.

Insurance brokers:

• Will advise on policies from all the providers to recommend the best deal for you.
• You get all the information, so you actually know what you’re dealing with.
• Heavily discounted premiums compared to the banks.
• If you have a health issue and one insurer doesn’t offer coverage, your broker can try elsewhere.
• A sound bunch of lads

Insurers:

• They can only sell their own policies, so you’re definitely not getting the best deal.
• If you have a health issue and they can’t offer you cover, then you’re on your own.

An existing policy:

• It’s a bit confusing, but you can use an existing Life Insurance policy as your Mortgage Protection, presuming it’s equal to the value of your mortgage and runs for the same term – so if your mortgage is for 30 years and €200,000, your Life Insurance policy would need to match or exceed that (e.g. a 31 year, €201,000 policy works; a 29 year, €199,000 policy doesn’t)
• If this is the case, you have to assign the policy to your lender. Essentially, you are saying, “Yes, I want to use my Life Insurance policy to pay off my mortgage.”
• If there’s any moolah left over afterwards, it’ll go to your dependents.
• You’re better off having Mortgage Protection and Life Insurance, especially if you have children.

By the way, you can’t assign life insurance you have through work (death in service benefit) for a mortgage.

Is Mortgage Protection The Same as Life Insuranxe

No.

Mortgage Protection is a type of Life Insurance that clears your mortgage if you die.

Life Insurance leaves a tax-free lump sum to your dependents to replace your income if you die.

Is it confusing?

100 percent.

Is it confusing on purpose?

100 per cent.

My two cents?

Get Life Insurance and Mortgage Protection. It’s two pay-outs. It won’t break the bank monthly, but it could mean an awful lot to your family down the line.

Think of it like this: A Mortgage Protection payout gives your family a mortgage-free home. A Life Insurance payout gives your family a replacement income. They need both, so you need both.

Can you change your Mortgage Protection policy?

Yes.

Any time you want.

It could totally be worth it for a better price or benefits, so seriously: look into it.

A few euro in the difference might not seem like much, but take that €5 a month and multiply it out by 12 and then by the length of your actual mortgage (which could be up to 35 years) and you’d be surprised how much it’ll add up to.

Just look at that fiver go. €5 x 12 x 35 = €2,100.

And that’s before we go anywhere near the difference you could save if you wanted to switch your actual mortgage down the line.

And don’t mind your bank if they say that getting Mortgage Protection or assigning an existing Life Insurance policy will delay your mortgage or that they’ll look more favourably on your application if you do what they want.

Remember: It’s all a

They’re trying to scare you into buying their overpriced policy.

Tell them where to go.

Because you already know where you can get the best mortgage protection quotes.

Why do you need to assign a policy to a bank?

To make it legal.

Otherwise, it’s a bit like two young fellas swearing loyalty by spitting into a handshake.

You telling your bank about your existing policy is grand and all, but if anything happens, they want the legal papers to say they get any payout.

Otherwise, all they’ve got is a spitty handshake and no cover.

How do you assign a Life Insurance policy to a bank/your lender?

It’s a bit like giving your bank a gift.

You take out the policy and pay the premiums.

Your bank gets any pay-out when you die (no ‘ifs’ here, pal).

To assign the policy (or policies if you have taken two single-life policies) you need to complete a deed of assignment for each policy,

The deed is a legal document that forms part of your legal pack. It’s written in legalese, which means it’s completely impenetrable to normal people.

You can try reading it, but honestly, you’ll have as much luck taking another crack at Finnegans Wake.

At least then you can sound cultured if you pretend you read Joyce’s gibberish.

You have to sign the deed of assignment.

Listen, it’s a bit like Apple’s terms and conditions; everyone ticks the box and nobody has a clue what they agreed to. Have you just sold your soul to a factory wherever iPhones are manufactured? Possibly.

But you’re still gonna have to do it.

The bit you sign is called the Notice of Assignment.

You sign it and return it to your bank with your mortgage protection certificate.

The bank then sends it to the insurer and the insurer notes the bank as the legal owner of your policy.

Job done*

Now, because the assignment is in effect a legal transaction, the banks don’t let us get involved so it’s up to them to send the necessary documents in a timely fashion to the insurer.

Once it’s with the insurer, we can chase it and give the insurer a bit of a prod if you’re in a rush, but until then, our hands are tied.

*That’s how it usually works, but each bank may do things differently.

What happens when the insurer receives the notice of assignment?

The insurer will assign your policy to the bank, which becomes the owner of your policy and receives any payout.

Who notifies your bank that the policy has been assigned?

The insurer will send a confirmation of the assignment letter to the bank stating:

Thank you for your recent Notice of Assignment in respect of the above-numbered policy. We have noted your interest and confirm that we hold no prior charge on this policy.

Once the bank has confirmation of the assignment, they’re happy to issue your mortgage cheque.

How do I assign two life of another mortgage protection policies?

If you’re buying as a couple we recommend two single life policies to reduce any potential inheritance tax.

Assigning two policies works the same way as assigning a single policy; however, you will have to complete a Deed of Assignment for each policy.

Is there a fee payable to assign a policy?

Nope.

And just like that, you’ve assigned your policy.

Your TL;DR of tips, once more:

• Don’t buy Mortgage Protection from your lender. You likely won’t be getting the best deal, and it will be a little trickier if you want to switch your mortgage later.
• You can use an existing Life Insurance policy as your Mortgage Protection. However, you’re probably better off keeping them separate, as two policies = two pay-outs and an easier life for your family.
• Mortgage Protection = covers your mortgage. Life Insurance = covers you.
• If you’re bringing your own policy to the table, you’ll need to legally assign it to your bank by following the steps in this article. It’s basically you, your solicitor, your bank and insurer formally saying that the policy will pay-out your mortgage if you die.
• Before you buy any policy, make sure you go with a reputable broker so that you know you’re getting the best deal.

That’s all, folks!

Over to you…

I hope that clarifies how to assign a mortgage life insurance policy to a bank. It’s simple, no matter how difficult your bank may try to make it seem.

Let me know if you need some help.

Thanks for reading

Nick

Editor’s Note | We published this blog in 2016 and have updated it since.