One of the things that people tend to forget when organising a homeloan is that mortgage approval will automatically spawn applications for at least two more financial products, writes Una McCaffrey

The first of these - the house insurance application - tends to be fairly straightforward, with few properties causing much of a problem when it comes to getting cover. The second - the term-life application - can however be a touch more complicated, with some unlucky buyers forced to spend more time getting past this stage than on the mortgage application itself.

Term-life assurance, or mortgage-protection cover, works on a relatively simple principle, in that it is designed to protect the mortgage provider in the event of a borrower dying before the mortgage has been fully repaid. The borrower, or policy holder, gets no real financial benefit out of the product, aside from the comfort of knowing that their outstanding mortgage liability will be covered if they pass away and leave family living in the property.

Premiums on this type of policy are fixed for the term of the product, which will by definition be the same term as the mortgage itself. All homebuyers must take out a term-life policy when signing up to a mortgage; lenders are generally reluctant to accept new customers without them.

In the case of couples, the usual solution is to take out a joint policy that would pay out on the death of the first borrower and then cease to exist.

Finding an insurance company offering to provide a term-life policy should be fairly easy, with mortgage providers generally marketing the products along with their homeloans.

Borrowers are under no obligation to go down this route however, with a number of financial intermediaries also in a position to provide the necessary cover.

Sample illustrations provided by online intermediary, LA Brokers, clearly illustrate the benefits of shopping around as much as possible on term-life cover.

These calculations show that a 25-year €250,000 mortgage-protection policy for a non-smoking couple where both individuals are aged 35 could cost €229.16 per month with the cheapest provider (Hibernian Life) or as much as €305.25 with a more expensive company (Eagle Star).

With figures varying as much as this, the benefits of shopping around seem particularly stark.

So far, so straightforward, but of course insurance policies do not always run as smoothly as we would like. The very nature of term-life cover means that the cost of these policies is intrinsically-linked with the health or likely longevity of the people taking them out. In practice, this means that if the would-be policyholder has an adverse medical history, they could either find it nigh-impossible to get cover or could be forced pay well over the odds for their policy.

One of the biggest problems on this front is that the revelation of insurance problems usually comes at a time when the homebuyer is well-advanced in purchase negotiations. Given that all borrowers require mortgage protection to be in place before they will release the funds, this could, in a worst-case scenario, leave a buyer high and dry without a mortgage or insurance cover at a time when they have already paid over 10 per cent of the property purchase price in a mortgage.

Ms Sarah Wellband of mortgage advisory firm REA says this type of situation occurs rarely, with most policies accepted without the need for medical reports from a GP or a medical examination.

"The main risk factors are if the client has a poor health record or has an occupation or pastime which is considered dangerous or regularly travels to countries which are considered risky," she says.

People who are declined cover or are offered it on a "postponed" basis (where it will be deferred for a period) can ask their lender to waive the requirement for a policy to be taken out, but the lender's willingness to accept this will depend on circumstances.

In a case where the main earner is the one with the difficult medical circumstances, for example, mortgage providers will be less reluctant to take on the business.

Ms Wellband points out that under the 1995 Consumer Credit Act, the requirement to take out a term-life policy will automatically fall away in some cases, such as where the property will not be the borrower's main residence, or where applicants are aged over 50.

The legal requirement will also fade where cover has been refused or is very expensive, but this will then leave borrowers relying on the discretion of the lender.