Term assurance - repaid mortgage - if invalid can I get refund?

grogdog

as already mentioned any dta is not tied in to a mortgage but reduces at a notional rate and as long as interest rates are not above this then on death what is left in the plan should clear the mortgage ie 50k dta over 10 years will reduce quicker than a 50k dta over 25years. so when a claim is made they wont ask for proof of mortgage amount ,they will pay the value is at.

the ops says
The original policy states the benefit will be "the amount of The Mortgage outstanding at the date of death".

so taking that literally if the mortgage increased to 200k at death would that be the amount expected to be paid out? the fact the mortgage is paid of is irrelevant the plan will carry on as if the mortgage was being paid and pay out accordingly and the fact that it finishes in 2012 means the live covered left will not be alot compared to original amount.

scottyh56

hi grogdog - that would be nice but where does all this notional rate stuff come in?

The document clearly ties it to a defined "The Mortgage to which this policy refers is a mortgage effected by the Life Assured and is repayable by level instalments of principal and interest."

If there is something written into UK law or Insurance Industry code of conduct I'd feel better, but all I have is the original document and a letter from Windsor Life that is very murky.

Anyway, they will no doubt write (before Christmas) & I'll let people here know what they say.

lisyloo

I am pretty sure that they would pay out the notional value.
It's quite common that interest rates change and people would then be left with either a shortfall or a lump sum.
With no mortgage you'd get a lump.

But I understand your query relating to the way the documentation is written.

Having a lump sum is not necssarily a problem so this would not be regarded as mis-selling. Lots of people have insurance in excess of their mortgage whether it's to pay for childcare or other bills in the event of death.
So I personally doubt very much you will have any hope here.

dunstonh

that would be nice but where does all this notional rate stuff come in?

It would be in the original illustration and policy documents. Most decreasing term assurances have them. The rate varies and can be set manually by the adviser which can impact on premium.

The document clearly ties it to a defined "The Mortgage to which this policy refers is a mortgage effected by the Life Assured and is repayable by level instalments of principal and interest."

No it doesnt. You are choosing to read it that way. The guarantee is that it will repay the mortgage providing there are no changes. It doesnt mean it will not pay out if there is no mortgage.

This is industry standard stuff. Many DTAs are written with reference to mortgages but used for other things.

JimmyTheWig

Given that there is doubt here, I am sure that the company will claim that it would have paid out in the event of your death. And therefore you won't be entitled to your premiums back.
You have no way (short of travelling back in time and killing yourself during the period in question, thus setting up a paradox much greater than that of a insurance policy to pay off a non-existant mortgage) to know whether it would have paid out or not.

Basically life insurance is a bet with the insurance company that you will die in the specified period. You lost the bet. Be thankful!

The thing is, even if the policy was worthless, who was in the wrong? If you never told them you had cancelled the mortgage then you can't blame the company.
You could blame your adviser, but then they could claim that they gave you the bit of paper hat you have quoted here so it wasn't mis-sold.


Cancel the policy if you don't need it and forget about it.

scottyh56

Hi dunstonh

I know what you mean about 'industry standard stuff' so perhaps as an industry professional you know you can read it differently to the way I read it. But in my job I spend much of my life reading tax legislation and all I have to go on is what's written in front of me in the statutes and maybe I should not worry but there is no reference to a 'guarantee', notional calcualtions or a separate illustration.

(I think I have complete documents from 1988. Lots of it - I see that in 1988 Charcols got £636 for organising this - and are still getting 71p a month!)

scottyh56

JimmyTheWig wrote: »

Basically life insurance is a bet with the insurance company that you will die in the specified period. You lost the bet. Be thankful!

I knew there'd be a silver lining in here somewhere!

I think Windsor Life were deliberatively evasive in not answering properly the letter I wrote 18 months ago. But I realise that I should have followed up then (however busy I was), not now.

lisyloo

I knew there'd be a silver lining in here somewhere!

Jimmy is right, even if they wouldn't pay out they aren't going to admin it in writing.

Anyway, it reminds of a story on the news.
A man was incorrectly informed that he had 6 months to live. He sold everything including suits & clothes.
Later on he wanted to sue the health authority.

He was searching for a second opinion ..........and here it is..........

"Cheer up mate, your alive !!"

scottyh56

Hey all - I've just spotted this thanks button thingy!!!