Is Death-In-Service Cover allowed for Mortgages?

joemac5367

Burridge60 wrote: »

Death in Service cover normally only protects the employee. Were they both employed by Jaguar Cars? In some cases Spouse cover used to be provided too but this was rare.

Thanks for a slightly more helpful reply. Dad was employed by Jaguar, Mum was employed as a nurse by the NHS. They both had similar types of cover and similar amounts. In the event of either of them dying the payout would have covered the mortgage.

Had either died after leaving the service of Jaguar Cars they would not have had this cover. If they did not have separate mortgage cover would you not now be complaining that the adviser had not "sold" them any cover?

Your point is fair and was raised by the adjudicator but there was no likelihood of them leaving their jobs (They're both still there today) and it was always open to them to purchase cover in the event that one of them left their job. And the closer to the end of the mortgage that was, the cheaper it would have been to buy! Since they planned to pay off the mortgage with it there was no point in them paying for life assurance while the D-I-S was in force. No need to pay for belt AND braces. [/QUOTE]

Death in Service is often discounted for mortgage and loan protection for this very reason.

Discounted by who? Commission-based Financial Advisors? Certainly not the lenders.

In 1988 some lenders did require life cover to be assigned or evidenced to them but since then matters have been far more relaxed.

I don't have the papers to hand but I'm sure it was after 1988 now I think about it. I had finished Uni in 1992 and they hadn't moved then so it was around 1992/1993

There's numerous reasons I think this was wrong but in short I believe my parents were encouraged to buy a policy they didn't need, with a view to making a commission on it. They said they had D-I-S and wanted to rely on that for the mortgage cover. Whatever an IFA thinks is 'best' that was their wish, but they ended up with life assurance being sold anyway. And a document from Yorkshire Bank a few years later shows they didn't know a policy was in existence. I mention this last bit to establish they're not making this idea up in the last 12 months to make a fast buck.

joemac5367

********* <snip> ********

Errata

Thanks for a slightly more helpful reply. Dad was employed by Jaguar, Mum was employed as a nurse by the NHS. They both had similar types of cover and similar amounts. In the event of either of them dying the payout would have covered the mortgage

Both would have lost that cover when their employment with those employere ceased which could have happened to both of them a week after they took out the mortgage. Leaving them with no cover.
What is so difficult to understand about that?

Burridge60

Some lenders would have required cover without doubt but to ask me now which would have and which wouldn't after all the years is impossible and unlikely to be treated as a reasonable enquiry by a mortgage company. They have trouble enough having staff make sure new business is processed and would most likely say they don't have that information.

Luckily your parents have been blessed with longevity of sustained employment. There are many who are not.

I would be foolish in my advice to a customer not to raise these matters with them and if they said no then they are entitled to say that.

Evidently your parents did not say no and may have taken on board what the adviser raised.

None if us were there and my memory is not what it was some years ago.

dunstonh is right there is no way you could confuse forms asking about medical history with those asking the address and number of rooms of your property. A cooling off letter would have been issued and in no way can this be delivered through the advisers hands to your parents. This would have set out exactly what they were buying and was the very reason why it was introduced.

Did your parents bank separately or jointly? Would two direct debits to Norwich Union not have raised their suspicions?

joemac5367

Errata wrote: »

Both would have lost that cover when their employment with those employere ceased which could have happened to both of them a week after they took out the mortgage. Leaving them with no cover.
What is so difficult to understand about that?

I understand that perfectly. And I said if they lose their job, they go out and buy life assurance cover to replace the D-I-S they just lost.

I must say it's a hostile crowd in this forum!

Let_Us_See

I have some sympathy for your parent's position, although I do not believe you have a valid claim. The reason for this is that I find it impossible to believe that an application for life cover could be processed, underwritten and issued without the knowledge of your parents.

Moglet

I can't comment on how someone ended up with a policy that they didn't want without their knowledge but if someone wants to rely on their death in service benefit and the lender hasn't stipulated a policy assigned to them, then that should be their choice - shouldn't it?

joemac5367

Burridge - Thanks for civility in your replies and taking the time to do so.

It seems to come down to

a) Was the life assurance a necessity (No)
b) Was it something that it would be right for an advisor to suggest (It probably was)
c) Did my parents want the assurance (No, but how do we prove that)

I've sent the evidence, documentary and otherwise to the FOS regarding point (c) and have been waiting for about a year now for a reply. They still have it on file waiting to be looked at. We shall have to see!

joemac5367

Moglet wrote: »

I can't comment on how someone ended up with a policy that they didn't want without their knowledge but if someone wants to rely on their death in service benefit and the lender hasn't stipulated a policy assigned to them, then that should be their choice - shouldn't it?

*exactly*

lisyloo

but if someone wants to rely on their death in service benefit and the lender hasn't stipulated a policy assigned to them, then that should be their choice - shouldn't it?

Yes, and it absolutely IS/WAS their choice.
There is no obligation at life insurance all to take it.
They were advised to take it because of the various short comings of DIS but at the end of the day it was their choice to take it. It wasn't forced on them.