The call comes in most weeks.
A closing date is agreed, the loan funds are ready, and everything has stopped because an insurer is waiting on a medical report from a busy GP practice that is three weeks behind.
Mortgage protection is required for most residential mortgages in Ireland under Section 126 of the Consumer Credit Act 1995, and no lender releases funds until the cover is in force.
The part of the application that decides how long that takes is called underwriting. Unfortunately, it is also the part many applicants do not plan for.
What is mortgage protection underwriting?
Mortgage protection underwriting is the assessment a life insurer carries out before agreeing to cover you. The insurer uses the information in your application to decide whether cover can be offered, how much the premium will be and whether any special terms should apply.
Its purpose is to keep pricing fair across everyone paying into the same fund, not to find a reason to say no. Most mortgage protection applications in Ireland are accepted promptly and at standard rates.
What information will the insurer ask about?
The insurer will ask about your age, height and weight, medical history and medication, smoking or vaping, alcohol, family history, occupation, hazardous pastimes and the amount and term of cover required
For underwriting purposes, nicotine includes vaping and nicotine-replacement products and most insurers require applicants to have been completely nicotine-free for at least 12 months before they can qualify for non-smoker rates. Bloods can be tested for cotinine, so it is important to disclose nicotine use correctly.
Mental health is another area applicants can sometimes feel hesitant to discuss about. Where anxiety or depression is the most commonly withheld history by far, it is very often accepted at ordinary rates on death cover once treated.
Under the Consumer Insurance Contracts Act 2019 your obligation is to answer the questions asked, honestly and with reasonable care.
How long does mortgage protection underwriting take?
If you are in good health and the amount of cover is moderate, the decision can come back the same day and cover can be in force inside a week, sometimes even sooner!
However, where the insurer needs more information, the clock changes.
- A telephone interview may be arranged within a few days, where a nurse takes the details from you and this can often remove the need for a GP report. It is the quickest route and worth asking for.
- A GP report is one of the most common causes of delay. Two to four weeks is normal, and it moves quicker when you ring your own surgery to nudge it while we chase it from our side. Although it can take six to eight weeks if the practice is busy or your doctor is on leave.
- The insurer may also request a nurse screening, or a medical examination. This takes one to two weeks to arrange, plus laboratory time. It may include blood pressure checks, a urine sample, blood test or an ECG at higher amounts or older ages.
- Where a consultant’s report is required, the timeframe depends on the consultant or hospital rather than the insurer. This is often the slowest type of evidence to obtain.
A case involving medical evidence realistically takes four to eight weeks, sometimes longer. Therefore, applying a fortnight before drawdown may put your closing date at risk.
Medical screening occasionally turns up something which the applicant knew nothing about, usually raised blood pressure or blood glucose. Although this may complicate the application, and it is often the most useful health check they have had.
What are the possible underwriting outcomes?
The most common outcome is cover at standard rates, which is the usual result. The insurer may also offer cover at a higher premium, known as a rating or loading which is common with a raised BMI or treated blood pressure.
In some cases, the insurer may apply an exclusion, uncommon on death/life cover. They may postpone its decision until treatment or investigations are complete. Or, in a small minority of cases, cover could be declined.
A rating is not permanent. It reflects your health on the day so if you stop smoking or the weight comes off it can go back for reconsideration.
Where cover genuinely is not available on reasonable terms, your lender can apply the statutory exemption. All of that needs time, which is the whole point.
One caution: Every future application asks whether you have been declined, postponed or offered special terms, and you must answer honestly. One properly prepared application beat three unadvised ones.
What happens before drawdown?
Receiving an underwriting decision does not automatically mean your cover has started. The policy only goes on risk once you have accepted the terms and the direct debit is in place. Your lender then needs the policy assigned to it, or its interest noted, which is another few days. Any temporary cover provided during underwriting may be limited, sometimes to accidental death only, so do not cancel existing life cover until the new policy is confirmed in writing.
When should you apply for mortgage protection?
Starting the process eight to twelve weeks before mortgage drawdown makes all of this straightforward. Two weeks makes it a problem, and a delayed drawdown is an expensive way to find that out.
With us, we compare quotes from five of Ireland’s leading insurers, Aviva, Irish Life, New Ireland, Royal Zurich & Zurich. A quote takes seconds, the application takes minutes and applying early ensures your mortgage drawdown will happen in a timely fashion as this plan needs to be assigned to your lender/bank.
