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Annual Report of the Ombudsman 2004

Chapter 4 - Health Declaration for Mortgage Protection

Health Declaration for Mortgage Protection

The administration of local authority loans for qualifying applicants also includes mortgage protection insurance plans. It has come to my attention that a number of claims made by individuals under the mortgage protection plan operated by local authorities have been refused. The basis for refusal was that the deceased person was not in good health at the time of completing the application for inclusion in the plan. On examination of the form for a mortgage protection plan which applicants sign, I noted that the information requested in relation to their health is minimal. In fact all they are asked to declare is that they are in “good health” at the time. Good health can mean different things to different people, e.g. a person suffering from diabetes, which is well controlled by medication, might consider themselves to be in “good health” generally, or at a particular time.

The application form does not define “good health” nor is any explanatory leaflet provided which explains the importance of this question or the potential consequences of a declaration of “good health” where this, in fact, may not be the case. An examination of the files of a particular local authority showed no evidence that the mortgage protection insurance had been explained to the applicants in question and, in at least one case, the form had been sent to the applicants by post with no advice other than a request that it “must be returned immediately to avail of this loan”.

The Councils’ procedures in this area, including the failure to request medical/health details, are far removed from those experienced by an individual taking out a private mortgage protection policy. The detailed information requested on the insurance company’s application form makes it very clear that one needs to be very open and honest about one’s state of health and previous medical history.

Given that the application form in question is likely to be of a standard type used by most, if not all, local authorities my Office wrote to the Department of the Environment, Heritage and Local Government. I suggested that the Department include this matter in a review already underway in relation to this application form. The Department accepted my suggestion and I understand that the draft of a revised application form for mortgage protection is close to agreement by all the relevant parties. In due course, I would expect the Department to write formally to all local authorities about the matter.

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