Decreasing Mortgage Cover

Jimstax

When setting up a new mortgage six years ago we took out what is named as 'Decreasing Mortgage Cover Plan'. This was to cover any mortgage payments if something happened to either of us. This was undertaken with Zurich an in hindsight wasn't necessary as we were both significantly covered with personal life insurance, taken out at the ame time again with Zurich.

Is this worth looking into as a PPI? I recall being told that it was required to get the mortgage.

Many thanks for any pointers

dunstonh

This was to cover any mortgage payments if something happened to either of us.

The something being death.

This was undertaken with Zurich an in hindsight wasn't necessary as we were both significantly covered with personal life insurance, taken out at the ame time again with Zurich.

The vast majority of the population are under insured in respect of life assurance. So, what you are saying puts you in a minority.

Is this worth looking into as a PPI? I recall being told that it was required to get the mortgage.

Its not PPI. It is life assurance.

It doesnt matter what you were told as you cant prove it. What matters are the facts. You say you are over insured. So, all you need to do in your complaint is present your reasons for thinking you are over insured. However, as already said, most people are under insured. So, make sure you are confident in your position as you will effectively be burning your bridges with the adviser you are complaining about.

Here is some guidance on life assurance for a married/couple. All debts should be covered by life assurance. Family protection should cover replacement income need AND lost pension income (as its not just the loss of one income on death but also the loss of the pension entitlement that would have built up over a working life).

£100k would provide around £5000 a year income. So, life assurance totalling £200,000 (ignoring mortgage and debts) would pay an income of £20,000 a year.

How does your life protection sum assured stack up and what level of income replacement and debts would need to be repaid?

Jimstax

Well, when I say over insured I meant that our other insurance policies would have covered the mortgage and some.

Jimstax

From what you say above I am a little more comfortable as it would seem to have been a well placed assurance policy. We have revisited and changed policies lately and removed this other policy for the time being for purse string reasons. New policies are good.

Many thanks

dunstonh

Well, when I say over insured I meant that our other insurance policies would have covered the mortgage and some.

That often happens. My family protection life policy pays more than my mortgage but if I used it for that mortgage, it would life the family short for replacing my lost income and lost pension contributions.

If you make a complaint on the basis you suggest, you will have to show all your life assurance as it was at point of sale and say why you think it is too much. Unlike PPI, they will have a factfind, needs analysis and a written report on file showing that you needed it. So, unless there is something wrong in that information (like a policy missed off), it is an easy one for them to reject.

The easiest way to think of your life assurance needs is to split it between debts being repaid and family protection. One policy covers the mortgage, one policy covers the family protection (although sometimes you can get 3 or 4 plans used or segments on plans to cover different timescales. e.g. £100k to end when youngest child is aged 25 but another £100k to end at retirement as its income replacement)

Jimstax

dunstonh wrote: »

That often happens. My family protection life policy pays more than my mortgage but if I used it for that mortgage, it would life the family short for replacing my lost income and lost pension contributions.

If you make a complaint on the basis you suggest, you will have to show all your life assurance as it was at point of sale and say why you think it is too much. Unlike PPI, they will have a factfind, needs analysis and a written report on file showing that you needed it. So, unless there is something wrong in that information (like a policy missed off), it is an easy one for them to reject.

The easiest way to think of your life assurance needs is to split it between debts being repaid and family protection. One policy covers the mortgage, one policy covers the family protection (although sometimes you can get 3 or 4 plans used or segments on plans to cover different timescales. e.g. £100k to end when youngest child is aged 25 but another £100k to end at retirement as its income replacement)

Many thanks for this. It has reassured me that all is and was in order.