critical illness claim advice

harryc_3

hi all , hope someone can shed somelight for me though i fear a trip to a financial adviser is on the cards. we have in place two standard life endowment policies to cover the cost of our house one of the polices was a top policy that was taken out when we married and moved into our new house , my wife already had a policy for her flat in place, my name was added to this policy , everyhting has ticked along for the last 15 years , with yearly letters from standard life telling us out polices are not going to cover the cost, we have unkown to them with the advice of our financial adviser switched to a split repayment / interest so we should still be ok , HOWEVER my wife has been diagnosed with a benign brain tumour and we are in the process of making a claim since it transpires that only the top up endowment has critical illness cover included. if standard life do make a payout they will cover the full cost of the top up policy , my question is how do we go about repaying this to our mortgage lender , alliance and leciester since I think we would attract penalties. is it even advisable to pay it straight back ..... hence any advice will be greatly appreciated.
though as I say I think it might be a trip to the financial adviser in the very near future, finally wehat we cant understand is why the crisitacl insurance wasnt taken out by my wife on the origianl poicy or why it wasnt included when we took the top up ne policy with them since it was included.

thanks

pinkcheshirecat

Hi - sorry to hear about your wife - I hope that everything goes well for you both. My husband and I found ourselves in a very similar position.

We did pay the money straight off the mortgage - we were lucky that my husbands employers were very good about paying him while he was off sick, so I suppose that it depends what the rest of your finances are like - will your wife need to take time off if she is working, will she only get SSP and can you manage with that? If not, what would be better for you - can you manage the rest of the bills if you pay the money off the mortgage or will you need the money to live on?

Regarding the penalty. We were told that for our lender at the time (Halifax) they would allow 10% of the balance of the morgage to be overpaid each year before we were charged anything. We had 3 different products on our mortgage so told them exactly what to pay off which bit - they also told us that the year is a rolling one, so 13 months on, you could pay another 10% without penalty. You also need to think about the interest you would receive on the savings if you invested it rather than paying it off and paying the penalty.

At the moment, calculate how much interest you would receive if you banked the money until the penalty clause had expired, then work out how much interest you pay on the mortage you would pay off over the same period. Then decide what is better taking account of the penalty. I know that with interest rates much higher than they currently are we wouldn't have been better off investing the money - but this may not be the case for you.

HTH

PinkCheshireCat

opinions4u

harryc wrote: »

HOWEVER my wife has been diagnosed with a benign brain tumour and we are in the process of making a claim since it transpires that only the top up endowment has critical illness cover included. if standard life do make a payout they will cover the full cost of the top up policy , my question is how do we go about repaying this to our mortgage lender , alliance and leciester since I think we would attract penalties. is it even advisable to pay it straight back ..... hence any advice will be greatly appreciated.

In such circumstances many lenders would waive their penalty clauses. You'd need to contact A&L to find out if they would.

Otherwise you may be better putting the cash in to the highest paying savings account you can find and making the repayment of capital when the ERC period expires. Alternatively (having carefully done your sums for future affordability) get out and enjoy some of the proceeds of the funds.

finally wehat we cant understand is why the crisitacl insurance wasnt taken out by my wife on the origianl poicy

When did you take out the policy? Did the life assurance company offer critical illness policy at that time? CI cover is a relatively new concept. It wasn't an option on my 1990 Standard Life policy.

or why it wasnt included when we took the top up new policy with them since it was included.

You should go back to the seller of the new policy and ask them why they didn't recommend critical illness cover for a larger amount at that point in time.

If you're not happy with their explanation, then you may have a case for mis-selling against the adviser.

That said, they may have recommended that you needed cover for the amount of the existing policy. This would have meant a separate critical illness plan being taken out which may well have been expensive. It's more than possible that the adviser identified the need, priced up the policy and you said no thanks.

Does the old policy have waiver of premium benefit attached to it? If your OH has been ill for some time there is the possibility of some of the premiums being met by this.

badger247

I received a CI payout, we had only just taken outa new mortage as I did not think the payment would ever get paid after a 3 year battle with the IC.

When they did pay we asked for a settlement figure, which they sent with a £3500 early redemption payment. It was only when I told them that we were paying with a CI payout that the waivered the ERF.

Thanks to spotting a forum post helped me save £3500 from a payout that took me 3 years to get.....

If you do not ask .................]]]

Badger