Term Assurance/Insurance Help Please?

kiwichick

HI All,

I am after some advice please. My husband and I are due to exchange contracts on our new house on the 24th of feb and all was going well until the post arrvied today.

We have received a letter from Legal and General with regard to the Term Assurance/Insurance on the mortgage.

They have said the policy has been underwritten but included the following points;

*They are unable to offer Guaranteed Insurability Options on the policy.
*It has not been possible to cover either of the applicants for the Waiver of Premium Benefit for Prolonged Sickness. The premium shown reflects this.

I dont know what either of these terms mean,nor how important/or not, they are. Is anyone able to help me? I'd like to have a better understanding of it before having to call them on Monday.

Many Thanks,
Allison.

AndrewSmith

Hi,

Guaranteed insurability means that the policy premiums (monthly cost) will not increase throughout the life of the plan. If this has not been offered the policy premiums will be reviewed every 5 years and could be increased at this time. It also means that any additional future cover will be separately underwritten as a new policy and subject to medical evidence at the time.

Wavier of premium is where the insurance company will continue to pay the premiums for you if you are unable to do so through ill health (exact coverage will be in the Key Features Document you will have recieved with the initial quote). If they are not including this, then you will have to continue the premiums yourself if off work ill for a long period.

I would guess that this decision has been reached by the underwriters due to some kind of medical history of illness in the past?

They are both important however the one I would say is most important is the fact that they cannot offer guaranteed insurability.

Hope this helps.

OshayAway

AndrewSmith wrote:

Guaranteed insurability means that the policy premiums (monthly cost) will not increase throughout the life of the plan. If this has not been offered the policy premiums will be reviewed every 5 years and could be increased at this time.

You might want to double check this, GIO has nothing to do with the premiums and can be declined on Guaranteed and Reviewable premiums. Legal & General's Technical Guide states "Guaranteed insurability enables you to increase your level of cover, without the need to provide further evidence of health, upon the occurrence of certain events."
If you think about it, it's obvious why a 'free' benefit like this is a common exclusion on any policy that has special terms offered due to medical reasons - your health may deteriorate in the mean time. At any rate it's not usually a major problem in most cases.

To set your mind at rest, why not contact your adviser or better still Legal and General directly. They will be able to confirm this ristriction.

dunstonh

Not sure what happened here but I read the same thread the other day and Andrew's response was corrected.

edit: found out why. There is a duplicate thread in another section. The correction is on that one.