Life and critical cover on ISA

Smudger7404

First time poster long time lurker...

Hi all,
I have just been reviewing all my finances over the past couple of months following much advice offered on this site.

However, I have a question relating to my L&G "Flexible Mortgage Plan with Critical Illness Cover".
This was a Maxi ISA designed product to clear off the capital of my mortgage.
I switched mortgages very early on to a normal repayment but left this ISA running and recently cashed it in and closed the account last year as the interest rate was awful. In fact I think it worked out I hardly made a thing from it in the 12 years I had it...

The question is on the crticial illness cover and life cover that was "included" in this policy and if it was mis-sold in anyway.
When I took it out, I was 24, single, and in full time employment.

Any thoughts?
Thanks!

dunstonh

recently cashed it in and closed the account last year as the interest rate was awful.

It wouldnt have paid any interest. That is not what they do.

In fact I think it worked out I hardly made a thing from it in the 12 years I had it...

You wouldnt expect it to. If you look at a typical 25 year term then breakeven historically tended to be around year 11. With the global recession not having a chance to recover, you effectively cashed it in during a negative period.

The question is on the crticial illness cover and life cover that was "included" in this policy and if it was mis-sold in anyway.

Possibly yes but in reality probably no. You didnt need life assurance if you had no spouse or partner or anyone living with you. However, you did need CI cover. So, in that respect the life assurance part was mis-sold on [paper. However, the cost difference between not having life cover and having it was probably under £1 a month. So, frequently you would see it being added as a it was such a small cost and not worth worrying about and chances are that at some point in the mortgage term, you would have a need for life assurance.

Smudger7404

I guess my terminology was not right when I meant "interest" ?

It was predicted to grow by 7% over the term in order to achieve the initial capital sum. However it was not making anywhere near that expected growth and although the statements started as "green" they dropped drastically to "red" in the past 4 years. Closing the account, the money is now in a high(ish) interest savings account that drip feeds a regular saver and am now holding a max cash ISA for 2 years.

But thanks for the heads up on the actual cost of the mis-sell.

Very much appreciated.

JANSPAM

Sorry to hi jack your thread,
We too were sold this product by Legal and General 13 years ago and at the time we were assured that it was not an Endowment ( we already had two endowment policies that were preforming badly). We were told this product was preforming so well that by the time our existing policies matured (in 12 years from the time we took out the flexible mortgage plan) there would be enough money in the plan to pay off our mortgage. How stupid were we! What really happened was the Legal and General sales adviser told us a load of rubbish and sold us something that was not what we wanted or asked for. We wanted to make sure there would be enough money to pay off our mortgage and now we're heading for another shortfall. How do these people sleep at night taking advantage of people who aren't savvi when it comes to these types of products. Out, only to lines there own pockets.
Just as a matter of interest the adviser who sold us this plan made himself a nice little earner of £1936 plus a yearly fee of £36 for sell us this product. It looks like he's going to end up with more money out of this policy than us!!!!
HINDSIGHT IS A WONDERFUL THING ISN'T IT!!
Once again sorry Smudger 7404 for hijacking your thread, i too have been a lurker for sometime, only posted 8 times.