life assurance help please?

pjs_3

Hi, we have our mortgage of about 108,000 with HSBC and are in process of getting an equity realease loan from them for 70,000 for major extension work to the house. We currently have life and critical illness cover with them too and now they want to charge us the same amount again for life assurance and critical illness cover for the new loan. I thought the new loan would just be added onto the mortgage and we would maybe pay a little more for life assurance and critical illness cover but not double!

I did question this with the man at the bank and he just said yes you need
it. Im not particularly clued up on money issues and just accepted his answer unitl I got home and thought some more about it.
Can anyone out there help me with this. Do we need to pay double?
thankyou

dunstonh

Bank insurance/assurance is very expensive. Take it down the IFA route if you want cheaper. Banks are not allowed to make insurance/assurance a requirement of lending.

pjs_3

thanks for replying. So if we go elsewhere for the life assurance policy do we still need to pay 2 lots of assurance or do we just ask them to give us cover for the combined amount even if it is in separate accounts?

dunstonh

You can just do the top up. However, with falling life cover costs, you already having an expensive provider and the fact that life cover gets cheaper per '000 the more you have on a single policy, you may find that a new one that covers the lot is cheaper.

An IFA or independent protection advisor could compare both options for you and give you the prices.

If you dont think you need the advice, you can look at some of the companies mentioned on this site who can do it cheaper. They offer no advice (and avoid the paperwork, time and consumer liaiblity that goes with advice) so give it to you even cheaper than an independent advisor can do it.

pjs_3

thanks very much for the advice. I will get some quotes and then call HSBC to cancel policy with them. Do you know if I can cancel it just like that or do you have to give them notice or pay a penalty?

AndrewSmith

You simply cancel the direct debit and inform the company that you wish it to cease.

However do not cancel existing cover until the new policy has been accepted and is fully in force.

Andy

pjs_3

thanks thats great i will do that.That should save some money. HSBC want 38.42 for the original policy and 35.76 for the new one, - so a whooping 74.18 per month for life and critial illness cover!!!!! Surley that is way over what it needs to be.