Mortgage death benefit/critical illness duplication policies?

summerday

Hello,

I am posting this on behalf of my mother, who bought a house in 2001, and at the time was told about mortgage insurances. I'm not sure whether it was the estate agenct who arranged this, or whether they passed her on to Countrywide Assured (who the policies are with).

Anyway, my mother definitely agreed to take out cover to pay off the mortgage if she died (Death Benefit), and critical illness cover to the amount of the mortgage in case she was too ill to work and would use it to pay off the mortgage. She thought that was what she had taken out and that it would continue until the mortgage was paid off when she was age 63 and that was that.

Well today she has received 2 letters from Countrywide Assured, one entitled 'Your Mortgage Protection Plan', stating that it is due to continue until she is age 63 to coincide with when the mortgage will be paid off, and states the benefits as:
'Death benefit' £14,558
'Critical illness benefit' £14,558.
Monthly premiums £21.35. This is absolutely fine, what she thought she had signed up for.

The other letter is entitled 'Your Personal Protection Plan'. The wording on this letter is very similar to the other one, about paying regular premiums for protection etc. This one however is due to go much longer past her repaying the mortgage (until she is age 71), The benefits are stated as being:
'Death benefit' £50.00
'Critical illness benefit' £40,000.00.
Monthly premiums £60.27.

No other benefits are listed- the 'income replacement monthly benefit' is stated 'no benefit included' on both policies.

My mother admits herself that she is terrible at dealing with her finances, and she would have been a salesperson's dream when she was sold policies back in 2001. She is adamant however that she wanted to be sensible and have one critical illness policy and one death benefit that would totally pay off the mortgage, only for as long as she still had the mortgage, but she didn't intend to sign up to two and definitely not past the mortgage being paid.

She unfortunately is not someone who reads the bank statements each month either, so wouldn't have noticed the 2 separate Countrywide payments coming out each month, or indeed may have thought it was a breakdown of the death benefit and critical illness components. It was only her reading these 2 very similar letters sent out on the 10th anniversary that made her confused and show me.

She now feels very upset that she has wasted money on an unnecessary extra policy when she only meant to take out the one for both critical illness and death benefit and struggles for money as it is.

I would be very grateful if anyone could kindly suggest whether they think there is a case for mis-selling and any advice for the wording of the letter would be appreciated.

Many thanks for reading.

magpiecottage

There are lots of gaps in the story but I think you will have trouble getting this complaint upheld.

Unless you have evidence that she was misled it will be an uphill battle.

The only point on which I think there might be grounds for complaint are if the premium was reviewable and she was not made aware at outset. Such a policy might well have a 10 year anniversary letter but a guaranteed premium policy ordinarily would not.

roonaldo

There is nothing wrong with paying for 2 policies. The lower cover on one indicates this make have been taken out as a "Top Up" policy. As may have been told as her total mortgage borrowing was around £55,000. Although this is just an assumption.

How much is her mortgage for?

dunstonh

She now feels very upset that she has wasted money on an unnecessary extra policy when she only meant to take out the one for both critical illness and death benefit and struggles for money as it is.

I am sure she wouldnt have felt that way had she suffered a claimable event. Its always easy after not suffering a claim to say insurance is a waste of money.

I would be very grateful if anyone could kindly suggest whether they think there is a case for mis-selling and any advice for the wording of the letter would be appreciated.

You can have as many policies as you like. Indeed, most households do. I have three running. Most people have mortgage protection and family/personal protection. So a complaint about having two would not result in an uphold. Only

if she could show she had no financial need would it result in an uphold but I cant see from those figures that it would be successful as the most common recommendation is to cover the mortgage plus £xx,000 of pounds on top. Nothing wrong with that at all.

summerday

roonaldo wrote: »

There is nothing wrong with paying for 2 policies. The lower cover on one indicates this make have been taken out as a "Top Up" policy. As may have been told as her total mortgage borrowing was around £55,000. Although this is just an assumption.

How much is her mortgage for?

The initial mortgage in 2001 was for £25k, the cover on the policy she meant to have has been one that reduced each year in line with the mortgage being repaid, the mortgage is now £14k approx.