Swapping mortgage life assurance

pbear28

Hi
Recently my wife and I had a finance review with our mortgage supplier Halifax, we had, in the last 4years changed from an endowment mortgage to a re-payment but kept the endowment on as a form of insurance. We decided to cash in the endowment and the guy at the halifax advised that he could setup a policy to cover the mortgage with critical illness for us naming both of us on the policy. I am due to lose my job in about 12-18 months and intend to pay off the mortgage or maybe pay off 95% of it and keep a tiny mortgage. At the moment our mortgage has an outstanding amount of only £21,000, and for this the guy in the Halifax has setup a critical illness cover. For this cover we are paying £59 a month, I think this is a lot to pay for that amount of cover i.e. a payment of £21,000 if something should happen. I have found a similar policy that will cover us for 5 years that costs only £23 a month we only need this for as I said 12-18 months, so can I cancel the Halifax policy take up the other policy and then because we do not need 5 years cover (but that's their minimum) cancel that one when I pay the motgage off.
How do I stop the halifax one, contact them and cancel then just stop the DD I assume.

Thanks in advance for all help.
PB

dunstonh

We decided to cash in the endowment and the guy at the halifax advised that he could setup a policy to cover the mortgage with critical illness for us naming both of us on the policy.

Was the endowment a Halifax endowment or another provider? Halifax sales reps are not authorised to discuss or recommend actions on the policies of other providers. If they did then they have possibly given you unauthorised and bad advice.

Providers like aviva, standard life or pearl have extra payouts on their endowments which a tied sales rep is not likely to know about. So, if you had one of those, the advice to surrender could be bad. It would certainly be outside of their authorisation.

I am due to lose my job in about 12-18 months and intend to pay off the mortgage or maybe pay off 95% of it and keep a tiny mortgage.

For reference, if you ended up on means tested benefits, the endowment is exempt from being included in the means test. Sometimes its worth holding on to them until you are back in work.

For this cover we are paying £59 a month, I think this is a lot to pay for that amount of cover i.e. a payment of £21,000 if something should happen.

It would be. Banks are the most expensive distribution channel. They are also the worst place to get advice.

I have found a similar policy that will cover us for 5 years that costs only £23 a month we only need this for as I said 12-18 months

just make sure it like for like as a lot of people mix up things like terminal illness and critical illness or guaranteed premiums vs reviewable or renewable. However, a short term isnt likely to be a problem with those. There is also budget and comprehensive versions of CI cover.

so can I cancel the Halifax policy take up the other policy and then because we do not need 5 years cover (but that's their minimum) cancel that one when I pay the motgage off.

Yes you can. Its also another reason why you shouldnt see a tied sales rep. They didnt have a suitable product for you and sold you 5 years of cover instead of one that met the need.

How do I stop the halifax one, contact them and cancel then just stop the DD I assume.

that is correct. Make sure you get accepted on the new policy though before you cancel the old. Otherwise you may end up without being covered for a period and sods law will dictate that is when you have a claimable event.

pbear28

Hi Dunstonh
The endowment was not a halifax one it was one that we had prior to changing to a Halifax re-payment mortgage and it was looking like we were not going to get a return that would cover the amount we paid in if we had carried on so we cashed in. I feel we were given wrong info on endowment but the guy who set it up was an IFA who has retired so we were basically stumped. The company who we contacted to look into this did not want to know probably nothing in it for them .

Thanks for reply.
PB