mortgage protection

Chin

Hi all

Is it true that I need to take out critical illness cover before I can take out a mortgage?
will standard life insurance not do?

my lender is saying it must be critical illness, but just wanted to double check.

if I do, I'm assuming I don't have to take it out with them and I can do it with someone else?

cheers

kingstreet

There should be no condition which requires you to effect critical illness cover or anything else with your lender.

At the most, they should be able to insist you take buildings insurance but you should have the right to choose your own provider.

If you have a key facts illustration for the mortgage deal (which you should if you've been expected to make an application) see section 9.

For example;-

Insurance you must take out through Hinckley and Rugby Building Society;-

You are not obliged to take out any insurance products through Hinckley and Rugby Building Society.

Insurance you must take out as a condition of this mortgage but that you do not have to take out through Hinckley and Rugby Building Society;-

Buildings Insurance.

You are required to take out adequate buildings insurance cover.

Chin

Good shout, I forgot about that.

No mention of having to take Critial Cover, just Buildings Insurance.

Why are they trying to force me to taking health insurance with them??? It's as if they are saying they won't process it further without it?

opinions4u

Chin wrote: »

Good shout, I forgot about that.

No mention of having to take Critial Cover, just Buildings Insurance.

Why are they trying to force me to taking health insurance with them??? It's as if they are saying they won't process it further without it?

Commission? Because they've identified that it's something that's right for you? Both even!

If you're buying on your own, it could be that Critical Illness cover is better for you than life cover.

If you're buying a life policy, adding a critical illness rider on to that policy is often only slightly more expensive (because if it pays out for CI it won't then pay out for death as well).

Personally I'd suggest buying your mortgage from the lender and then buying your protection products from an IFA. Although some IFAs may not be that keen on spending a couple of hours with you for a realtively small commission.

Chin

Its a joint application and we're going direct through the bank - do you reckon they're still on commission?

Thanks for your help

kingstreet

Chin wrote: »

Its a joint application and we're going direct through the bank - do you reckon they're still on commission?

Thanks for your help

Absolutely. Banks make more out of flogging insurance products than they do out of lending. Their cover is among the most expensive in the market too.

Senior_Paper_Monitor

Name and shame I say !

I'm sick to death of this issue - if professional advisers behaved like the banks do every day they'd be hung, drawn and quartered !

Also check the front page of your KFI and see if you are being advised or provided information (one box or other will be ticked) - I would be interested to know.

Leon_W

You will be right royally ripped off by having a bank arrange any type insurance be it life, critical illness or buildings.

If you need advice see an independent.

Chin

The funnier side of this is that having spoken to my employer I actually get critical illness cover with them.
However aparently this is not ideal for my mortgage as they will continue to pay my salary monthly rather than pay out a lump sum like critical cover will do.

Can I just tell them to do one?
Will it hamper my application?

I guess if they turn around and say they wont process it further without it I'll have to take it out but would be far happier saying no for now and sorting it out myself in a few years... :mad:

kingstreet

Chin wrote: »

The funnier side of this is that having spoken to my employer I actually get critical illness cover with them.
However aparently this is not ideal for my mortgage as they will continue to pay my salary monthly rather than pay out a lump sum like critical cover will do.

Can I just tell them to do one?
Will it hamper my application?

I guess if they turn around and say they wont process it further without it I'll have to take it out but would be far happier saying no for now and sorting it out myself in a few years... :mad:

You'll be a member of a group permanent health insurance (PHI) scheme which pays you a monthly income, following a set waiting period, if you are unable to work due to illness or disability. You can normally claim until you are fit enough to return to work, or until you retire, whichever is the sooner.

The advantage of PHI is that you don't have to be seriously ill, as you would to claim on critical illness cover, just sick enough to be unable to work.

You have to ask yourself if YOU feel you NEED a plan which will pay off your mortgage, or provide funds for convalescence or adaptations to your home if you don't fully recover from the condition. If you don't see the need at this point, tell the "adviser" that is your feeling and you don't wish to continue with the discussion.

If you do feel critical illness would be worthwhile, I'd have a chat to an IFA who will establish all your needs, things you should look at now and things you'd like to look at later. By doing this, you'll probably save yourself a lot of wasted premiums.

Worst case scenario. You continue with a critical illness application through the bank, then cancel it under the statutory cooling-off provisions when it goes into force.

Your choice. I'd tell them to get lost, if it were me. They don't have the right to suspend your mortgage over your head to get an insurance sale.

Chin

Great thanks.
I'm going to tell them to get lost in that case.

It would be nice to have a critical cover policy, but as first time buyers we are counting every penny at the moment so would rather sort it out in a few years time when things have settled a bit.

appreciate everyones advice