Updated 11.30am
A WOMAN TERMINALLY ill with cancer was told by a bank that her mortgage would not be paid off when she died as she was in arrears of €260 on her life insurance, a senator has claimed.
Fine Gael’s Deirdre Clune is now calling for banks to keep track of when customers fall into arrears on this mortgage-related insurance.
The Central Bank has confirmed that it does not keep records on this.
“The principle concern I have here is that, in many cases of family arrears, the bank own the insurance company,” Clune said.
“[This means] when someone goes into arrears, it is not in the interest of that financial group to remind customers how vital it is to keep paying the smaller insurance premium to ensure their mortgage insurance is safe and intact.”
In a statement yesterday, Clune wrote of the following meeting with a constituent:
This issue was highlighted to me lately when a constituent of mine came to me about her mortgage arrears. She had fallen into arrears on her life insurance also.On discovering she had terminal cancer, her financial institution has refused to pay off her mortgage when she dies because she was in arrears on the Life Insurance, a policy she had paid into for years.Arrears on her life insurance totalled a little over €260 yet the financial institution is now refusing to pay out the €110,000 policy when she dies.
Clune added that she found it “deeply troubling that banks are allowing customers to go into arrears on these insurance policies when ultimately, it is the bank who gains by not having to pay-out on the policy”.
Earlier this year, the National Consumer Agency said that many customers were paying too much on their mortgage protection insurance, and could save up to €5,000.
[Update: 11.30pm]
Since this article was published, the Irish Mortgage Holders Organisation has confirmed that it is working with AIB on behalf of the woman.
A spokesperson said there is an arrangement in place between the lender and borrower.
“The matter will be resolved in order to protect her and her family.”
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