Posted: Friday May 27 2011, Blog Tags:
It may never be 'Rocket Science' to suggest shopping around for the best price on any purchase and while a €126 per year on the Mortgage Protection Premium may not sound like a lot, it can certainly add up over the lifetime of a Mortgage. Also it appears the healthier you're lifestyle then the more you can save. So start shopping around!
Couples can save up to €126 a year on their mortgage protection premiums by seeking out a better deal, according to the National Consumer Agency.
Mortgage protection and life insurance premium rates have fallen dramatically recently due to fierce competition among insurers and the fact that people are living longer, so insurers are having to pay out less often.
Now a new survey by the state agency has found massive variations in premium rates for life insurance and mortgage protection.
Premiums range from €53 a month to €76 a month for a couple who smoke and want to take out mortgage protection insurance on a €380,000 home loan.
Over a year, the difference works out at €274. But over the 35-year term of the mortgage the difference climbs to more than €9,500.
Non-smokers can save €126 a year by seeking out the best rates in the market.
The couple in this example have joint mortgage protection cover, which means the policy will pay out the sum insured if one of them dies.
Huge savings can also be made on life insurance.
A couple who smoke could be over-paying by €335 a year by failing to get the lowest premium in the market, the National Consumer Agency research found.
The survey examined the cost of term-life and mortgage protection cover against a range of different consumer profiles.
Maria Hurley of the consumer agency said the research also found that smokers who kick the habit for at least a year can save up to €590 annually for life insurance by getting the best deal.
Chief executive of the Irish Brokers' Association Ciaran Phelan said households typically phone a couple of insurance companies every few years, identify the best deal at that time and just assume that the same provider will continue to offer the best price. But this is wrong.
"Prices change dramatically all the time, so it pays to let a broker shop the market and get the best cover at the most affordable price," he said.
Most consumers need mortgage protection and term assurance to replace their income in the event of their untimely death. A 40-year-old couple spending €1,000 per annum can typically afford €200,000 to €300,000 in cover.
With increasing longevity resulting in falling insurance prices over the last few years, a saving of at least €200 could be achieved, he said.
- Charlie Weston Personal Finance Editor, Irish Independent