Axa Multiplan

foxgloves

I know this isn't the first post about the Axa Multiplan. I took this policy out as a FTB in 1994 and opted to pay a small increase each year. The plan pays out to cover the cost of my mortgage in the event of my death but a portion of the money is invested to provide a lump sum at the end of the mortgage term. I currently pay 43.62 per month. Axa have indicated that unless I increase this to 113.00 per month, there will have to be significantly higher increases from 2014 to maintain the same level of return. This policy was promoted to me by my mortgage provider back when they could do deals with specific companies & only promote their products tho' I did understand fully at the time that all investment products can go up as well as down. As we both work in the public sector & our jobs are no longer secure, we are doing a financial review and I've decided that 43.62 a month is not really a viable amount to keep paying (&113.00 definitely isn't!) given that any lump sum is likely to be low. Value of units is 3004-61 tho' I haven't yet asked for surrender value if I cash the policy in. Do I legally have to have life assurance to have a mortgage? My partner has it for himself, we have no dependents, we have about 50,000 positive equity in the house, he would get my pension lump sum in the event of my death and we currently have no large debts. As we are about to enter 'lean times', (involving paying to retrain for at least one of us) it would be good for our budget if we didn't have to pay into a policy that's probably had its day in terms of appropriateness. My thoughts are that I would cash it in then when budgets are more certain, take out a lower cost product simply to cover remaning term of mortgage. There seem to be some really knowledgeable people on this forum, any thoughts welcome. Many Thanks.

FinAdv

Hi,

Its not a legal reuqirement to have life assurance for the purpose of mortgage. The only legal requirement is Bulidings Insurance. Generally, to protect the mortgage people take out MPPI (mortgage payment protection insurance). But again its not a legal requirement.

lisyloo

Do I legally have to have life assurance to have a mortgage?

No.
But what oftens happens is that advisors say "you need to take this for your mortgage" and they really mean that they highly recommend it but word it in such a way that applicants believe it's a condition of the mortgage.

You may have "death in service" benefits at work.
You also may have pension benefits as most pension pay out either a lump sum and/or a pension to beneficiaries.
You are also quite within your rights to decide that both adults can look after themselves as a survivor even if that means selling the house.

I note that you use the word "partner".
This might imply that you are not married.
If you are not legally married or in a legal civil partnership then some caution is required.

If you have no will then the intestacy laws will not recognise an unmarried partner. So you might find what happens is not what you want.
So you need to make sure you both have wills and also you have formally expressed your wishes for any pension schemes or death in service schemes.

(Formal civil partnerships are recognised the same as marriage but not just living together).

dunstonh

Do I legally have to have life assurance to have a mortgage?

As others have said, not nowadays. However, it was more common in the 90s for lenders to insist on it. What matters is today though. Not 15 years ago.

foxgloves

Thanks so much for your advice. Yes, lisyloo, we are married, so at least that reduces the potential problems you mention. The Axa Multiplan WAS sold to me as something I had to have as a condition of the mortgage. Those exact words may not have been used but that's the understanding I came away with and dutifully took out the policy they were recommending. I think I'll definitely ask for a surrender value. If we are both made redundant from March 31st which is unfortunately a possibility as we've just heard how many Local Government jobs are to be lost in our council (3000), then it's more important that the 43 a month goes into absolute essentials. If we are lucky enough both to keep working, then I'll look at taking out a more up to date term of mortgage product. Can't believe I am being so financially prudent......a few years ago, I'd still be out spending as normal (on credit!) and barely casting an eye over my bank statements. This site has helped transform my attitude to money and I wish I'd discovered budgetting 20 years ago!! Never mind, better late than never. Thanks again x