Do Lenders have to show endowment policy cost breakdown during sale?

Toffeemen · 26 November 2015 at 5:11PM

We took out an endowment policy back in 1999 which included critical illness cover. The cost breakdown assigned to the mortgage repayment fund, critical illness cover and administration costs were however never communicated to us either verbally or in writing during the sale process (and not clearly discernible in annual statements either). We have also found that the CIC element cannot be removed unless the policy is either frozen (no more policy payments although admin charges will still be applied) or the policy is redeemed early (maturity date 2024). Did the lender have a legal obligation to declare this information to us during the sale process?

Nearlyold · 26 November 2015 at 6:35PM

Toffeemen wrote: »

We took out an endowment policy back in 1999 which included critical illness cover. The cost breakdown assigned to the mortgage repayment fund, critical illness cover and administration costs were however never communicated to us either verbally or in writing during the sale process (and not clearly discernible in annual statements either). We have also found that the CIC element cannot be removed unless the policy is either frozen (no more policy payments although admin charges will still be applied) or the policy is redeemed early (maturity date 2024). Did the lender have a legal obligation to declare this information to us during the sale process?

Was it the lender who arranged the policy? The CIC element cannot be removed because it is part and parcel of the policy and there would have been no requirement to inform you of this (why would you want it removed anyway). The closest you would get to the cost of the cover would be the reduction in yield figure in the policy disclosure docs which no doubt would have met all regulatory requirements at the time.

magpiecottage · 26 November 2015 at 6:48PM

The PIA (the regulator at the time) was not specific about this as I recall.

dunstonh · 26 November 2015 at 6:51PM

We have also found that the CIC element cannot be removed unless the policy is either frozen (no more policy payments although admin charges will still be applied) or the policy is redeemed early (maturity date 2024).

That is correct. it would break qualifying rules if it did.

Did the lender have a legal obligation to declare this information to us during the sale process?

No.

Toffeemen · 27 November 2015 at 10:40AM

Yes it was but the reason for having it removed is that we cleared the mortgage early. We no longer require the CIC element as a safety net to ensure repayments to cover mortgage and the combined repayments exceed the value if retained as an investment. Cover for certain illnesses also cease beyond age 60 which both of us will reach before maturity.

Do Lenders have to show endowment policy cost breakdown during sale?

Comments

Categories

Get our FREE Weekly email full of deals & guides - and it’s spam-free