Mortgage Life Assurance - amend policy with new mortgage?

Sponge

I took out a repayment mortgage 2 years ago, £120,000 over 30 years. To go with this I took out an insurance policy (decreasing) for the same amount/term.

My mortgage deal is ending this October and it looks like I'll be remortgaging with the same lender, but reducing the term to 25 years and the balance is now £88,000.

Should I tell the insurance company of these changes, or can I just leave the policy in place at the higher insured value and longer term?

We may move house in the next few years, which will undoubtedly mean an increase in the mortgage and maybe even the term again.

lisyloo

Did you take out a level term policy? i.e. one that always pays £120K.
There are policies that decrease along with the mortgage although I've termporarily forgotten the name - decreasing term rather than level term I think.

You can certainly leave the policy in place which means the excess would be paid to your estate/beneficiaries in the event of your death.

Personally I probably wouldn't bother changing it as the cost difference is likely to be fairly insignificant.

If you actually toook a decreasing term policy then you need to bear in mind that the amount insured has decreased.

Sponge

Yeah, it's a decreasing term policy. So my thinking is, as I have now reduced the term and size of the mortgage quicker than the insurance policy is decreasing, that I am now effectively 'over-insured' and can just leave the policy as-is. Or am I wrong?

I'm quite happy to leave it as it is. As you say, the premium reduction, if any, would be small and any extra money will just be a bonus for the estate.

castle96

the life cover can be 'stand alone', ie no mortgage. Just leave it as it is. No need/requirement to tell insurance coy