Investigation launched into mortgage repayment protection insurance

Investigation launched into mortgage repayment protection insurance

The Central Bank are going to lead the investigation into why thousands of homeowners have been denied payouts on insurance policies taken out to pay their mortgages in the event of them losing their jobs

An investigation has been launched after thousands of homeowners were denied payouts on insurance policies taken out to pay their mortgages in the event of them losing their jobs.

According to the Irish Independent, the Central Bank is to investigate whether the insurance was mis-sold.

People who feared being made redundant took out repayment protection insurance on their mortgages when the housing bubble burst.

This type of insurance is different to mortgage protection insurance which lenders demand that mortgage holders take out and only pays out if the homeowner dies.

Instead, mortgage repayment insurance covers mortgage payments for a year if the insured person loses their job through redundancy, an accident or sickness.

But many of those who took out this optional cover found that insurers refused to pay out when they were laid off.

Small print in the policy contracts allows the insurers to refuse a claim if there was any suggestion of lay-offs by the policyholder’s employer.

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