The impact of Covid-19 on your mortgage protection or life insurance

Financial advice column

The impact of Covid-19 on your mortgage protection or life insurance

We all know that Covid-19 is having impacts in many unforeseen areas of life. It will be years before the true cost of Covid has been realised, but in the business of life assurance and protection policies these impacts are beginning to rear their head.
In recent times there has been significant coverage in the media of a particular case where a lady with a high BMI was refused a mortgage by a bank on the basis that she was unable to secure a mortgage protection policy (required by law for all mortgages before they are drawn down).
The reason for the refusal of this mortgage protection policy by the several mortgage protection agents she tried to purchase it from, was that her high BMI placed her at greater risk of a Covid-19 complications, and the condition was not considered sufficiently serious by the HSE to require an early Covid-19 vaccination.
Health questionnaires are routinely issued by protection providers when applying for any kind of protection policy, however the situation with Covid is proving it even more difficult for anyone with any kind of medical complication to move on with their life plans, which was evident from this particular case.
Here, we take a look at some of the questions posed in relation to obtaining life insurance and protection in the current Covid climate:

Can you get life insurance if you have had Coronavirus symptoms?
If you have Covid-19 symptoms, have been advised to get tested or have been diagnosed with it, you will need to wait until full recovery before you can get cover. Many companies will ask for proof of dates of your illness if you have had it and recovered.

Why is Covid-19 affecting Life Insurance?
Covid-19 can make anyone ill. But for some people, the risk is higher. According to the HSE, there are 2 levels of higher risk:
Very High Risk - If you fall into this category, then you’re going to struggle to get life insurance or mortgage protection. A few examples of the Very High-Risk conditions (from the HSE website) are: people over over 70 years of age with any underlying conditions; anyone who had a transplant, have a history of advanced cancer, have kidney disease, a serious heart condition, cystic fibrosis, severe respiratory conditions or a BMI over greater than 40.
High Risk - If you fall into this category, it’s going to be tricky to get life insurance or mortgage protection. Cover is available but you may be charged an extra premium (called a loading).
The underwriting for both types of cover is identical. Conditions which are in the high risk category according to the HSE website are heart disease, high blood pressure, diabetes, chronic kidney disease or liver disease, a history of  cancer, a weak immune system or obesity

Can Covid-19 stop me from getting a mortgage?
As you may know, mortgage protection is mandatory if you’re getting a mortgage. The banks insist on the security of knowing your loan will be cleared if you die. But there are some exceptions to this rule.
If you are unable to get mortgage protection, the bank may offer you a mortgage protection waiver. This is a document you sign stating that you understand the consequences of not taking out mortgage protection should you pass away - the mortgage repayments will have to be taken on in full by your partner. The waiver is offered at the discretion of the bank so you don’t qualify automatically if you can’t get mortgage protection. The bank will look at the repayment capacity of your partner, their job security, and the loan to value of the mortgage.

Is Covid-19 delaying mortgage protection applications?
Yes, we have seen a marked delay in getting cover for clients. In addition there can be extra delays if the insurer requires a medical report from your GP, which can take upto 8 weeks depending on how busy your GP is.
The backlog created by Covid-19 has created the perfect storm due to the huge demand on GP’s who are already overworked due to Covid.

The main tip for anyone out there looking for any kind of protection policy in the current climate is not to delay. It will not happen instantly, so give yourself plenty of time to prepare.

Barbara McManus QFA is a Financial Adviser with Wealthwise Financial Planning who have offices in Carrick on Shannon, Co Leitrim & Oranmore Co Galway. All details and views contained within this article are for informational purposes only and does not constitute advice. Wealthwise Financial Planning makes no representations as to the accuracy, completeness or suitability of any information and will not be liable for any errors, omissions or any losses arising from its use. Wealthwise Financial Ltd T/A Wealthwise Financial Planning is Regulated by the central Bank of Ireland #CI6614.

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