were we missold mortgage life insurance

silversnail

We were sold a mortgage life insurance policy about 10 years ago, paying £50 a month. I did cancel it when I realised we were still paying for it about 3 years ago. When all the PPI misselling kicked off I wrote to try to claim it back - it was only then I realized that it wasn't PPI but mortgage life insurance. It was sold through a broker who worked for the same building society as we were taking out the mortgage with; it was being done at the same time and seemed part of the package we were taking on. We were sold a PPI at the same time, but it was free for one month and I cancelled it when we knew we were about to be charged.

I feel a bit stupid really, as I obviously had no idea what we were being sold, it was not something we would have been aware of until the broker suggested it, it was not something we ever felt we needed/wanted. We had no dependents at that point, and now we have I do not find myself rushing out to replace the policy. I feel at best we were badly advised, and at worst misled. We do not have money spare and have paid more than a grand a year for it!

The reply from the building society said we were aware of what we were purchasing, and I see from posts here that mortgage life insurance is seen as a valuable product. Is this my stupidity, or has this happened to other people?

Thanks everyone for your input.

Dave_Ham

Had you died during the term, your OH may have taken a different view on its merit.

Holly will probably be able to word something better than I can if she sees this thread, but in my opinion this has no merit for a claim as you were covered for this period.

Whilst you can get cheaper cover than your bank and I fear they probably egged it up a bit to sell the policy, forget about this.

I have had contents insurance for the last 15 years and never once had a claim, could I do without it and if I write to my provider do you fancy they will refund it?

Senior_Paper_Monitor

I think the answer to this lies in "The reply from the building society said we were aware of what we were purchasing".

I suspect this was an unadvised sale - i.e they provided you information and you chose.

You are totally entitled to your current decisions on protecting (or not) your family.

andy.m_2

your lender may well insist on cover being in place. You better check.

Also, £50 pcm is £600 not over a grand. So dont feel too hard done by.
It may be that high if you both smoke and have a penchant for bungee and sky-diving.
Alternatively speak to cavendish on line, they tend to come out very well in the tables.

You need to let go of the band wagon and look at the bigger picture in this case.

dunstonh

When all the PPI misselling kicked off I wrote to try to claim it back - it was only then I realized that it wasn't PPI but mortgage life insurance.

It doesnt matter what it is. That isnt the issue with PPI. The "PPI" issue is about how it was sold and is mostly to do with non-advised cases. For reference, the FOS stats show that just 0.2% of the complaints they get are advised cases of PPI. You can complain about any product advice if you want.

It was sold through a broker who worked for the same building society as we were taking out the mortgage with

So, that would make it on advised basis. Although are you sure it was a broker and not a mortgage adviser? Not likely to affect any complaint much but most lenders don't use brokers.

I feel a bit stupid really, as I obviously had no idea what we were being sold

Are you saying that you didnt know what life assurance was?

it was not something we ever felt we needed/wanted.

Which would put you in a tiny minority. The vast majority of people with mortgages take out life assurance is it is totally common sense to do do. It is highly unlikely you didnt have a need for this.

We had no dependents at that point

Were you not dependent on each other?

I feel at best we were badly advised, and at worst misled. We do not have money spare and have paid more than a grand a year for it!

You do not have spare money despite there being two of you. If one was to die, then how would the other handle the loss of income if there was no life assurance?

Doesnt sound like you were badly advised at all. Sounds more like you have a vital need for it but dont understand that.

The reply from the building society said we were aware of what we were purchasing, and I see from posts here that mortgage life insurance is seen as a valuable product. Is this my stupidity, or has this happened to other people?

Advised products have a factfind, needs analysis and report. You have a massive debt on which you are financially dependent on your partner (and vice versa). So clearly have a need for life assurance. Life assurance complaints are low in volume and even lower in upheld rates. I suspect the only way you would get a complaint upheld is if you didnt need it. However, everything you have said suggests you do.

Whilst I am not going to make the accusation of compensation chasing bandwagon, there are bits of your post that do hint at that and no doubt the complaints handler at the bank felt that. (complaining about PPI but you dont have PPI. Now complaining about life assurance despite needing it. It looks like an opportunistic try it on. doesnt mean you are. Just saying how it looks).

holly_hobby

Hi all,

Pretty much been covered - but I'll add my tuppence worth .

Duns. has already picked up on the adviser issue - this sounds like an advised sale by an employee of the lender, so any product recommended and sold will have proceeded the completion of a fact find (ie info about you, your financial circs, existing insurance/investment policies, attitude to risk, and any shortfalls in protection - whether you effected provision for them or not.)

You would have then been provided with a Reason Why Letter (RWL), which should explain what the advisers recommendations were, what was refused by you and why, and what was accepted.

The rejection by the lender of your complaint, should have contained copies of the POS docs, supporting their findings, as part of good complaint handling practices. (although not all providers are as thorough as they should be in doing this) - so you should have already re-visited the recommended sale (if you didn't have your own copy of the RWL to hand).

From my evaluation of your complaint, you effected a joint mortgage, which was based on joint salaries, and you had no existing life provision in place.

You purchased life cover alongside the mge arrangements, but seem vague or not to be able to recall what underpinned the sale of the policy - save that you subsequently felt and feel that as you had no children, life cover was an unnecessary recommendation and purchase made by you as part of the mortgage recommendation process.

Now whilst life cover is not a mandatory requirement of the lender when effecting a mge (such as blds insurance is), you are a couple with a joint debt, no doubt based on your joint incomes - thereby proficient finanical advice would be to recommend a joint term assurance to repay the mge debt on 1st death - indeed for the adviser NOT to have recommended this would have landed him very serious do doo on any audit (or legal claim by your surviving partner that this protection was not discussed or recommended at POS, with their negligence in this causing your estate a direct and negative financial impact that could have been provided for or considered, IF the adviser had acted with due care and diligence and highlighed both a need and solution). To be super, super picky it could be claimed that the level of cover to be considerate of any occupational pension DIS benefit (with your partner as beneficiary under an expression of wish, if you are not married) - but ideally you write a standalone jnt mge protection policy and leave DIS in tact.

Dave H and all,, are correct and I also don't believe this was an inappropriate sale - you admit you had a joint debt, based on joint incomes - so it would not be unreasonable to assume/assess that you would be directly financially disadvantaged by the death of your partner and loss of their income. (and thats assuming you could return to your normal occupation & salary level - following the emotional impact of your partners passing)

The only possible mis-sale could be that a Level Term Assurance policy (LTA), was recommended & sold, for the sole purpose of covering a repayment mge, as the cheapest form of life cover (and therefore most appropriate) for that purpose would be a Decreasing Term Assurance (DTA), or if you are married if 2 separate policies were sold to each of you to cover the mge (but even that can be suitable in some cases, esp non-married buying partners) - and that would be the only aspect of this case that I believe would hold any real weight complaint wise.

Dave H is correct, there is certainly no merit in taking this to FOS, as the recommendation of life cover for the mge was both suitable and appropriate to the circs. Indeed it could be said that you would have been thought reckless not to have effected it, rather than you "being stupid" for taking it as you put it, and protecting yourselves for the proceeding decade. And I do believe the lender would cite your referral of the matter to them as frivilious and vexatious.

So lets move on ... you now have a mge without any life cover, you need to be honest in assessing if either of you would be able to continue to maintain the mge without the partners salary - as you may rue trying to save a few £s now if such an event occurs and you end up having to sell the property, or worse, simply because you can no longer afford the mge on a sole income.

As I say, if you have a repayment mge a simple joint DTA will do the job, and is the cheapest form of suitable life cover available - I urge you to reconsider your life protection provision, I really do.

Hope this helps

Holly

silversnail

Many thanks for your detailed replies. It has clarified issues considerably for jme and I can now bite the bullet and say four grand down the drain was due to my lack of awareness.

We had switched mortgages before the lender who issued us with the insurance, and have switched since, and this is the only time life insurance was taken out by us - indeed, if the subsequent lender had asked us about it I wouldn't have known we already had it.

We have discussed (and indeed while we were covered, though we didn't know we were) what we would do in the case of one of us not being able to pay the mortgage. I would always have been in the position of covering the whole mortgage (just!) myself and anyway, would not want to stay in the property as it suits my self employed working from home partner far better than it does me. My partner would be in a different position however, and would be unlikely to be able to continue in his line of work if he didn't have my income to sustain him on a day to day basis; thus he would likely also sell the property. Thus I do not feel irresponsible for having no insurance cover. We have contigency plans already in place.

The lesson learned is to be more on top of what is going on! Wish me luck!

holly_hobby

silversnail wrote: »

We had switched mortgages before the lender who issued us with the insurance, and have switched since, and this is the only time life insurance was taken out by us - indeed, if the subsequent lender had asked us about it I wouldn't have known we already had it.

Surely the monthly DDM leaving your bank account would have made you question why it was there, and what it was paying for.

silversnail wrote: »

We have discussed (and indeed while we were covered, though we didn't know we were) what we would do in the case of one of us not being able to pay the mortgage. I would always have been in the position of covering the whole mortgage (just!) myself and anyway, would not want to stay in the property as it suits my self employed working from home partner far better than it does me. My partner would be in a different position however, and would be unlikely to be able to continue in his line of work if he didn't have my income to sustain him on a day to day basis; thus he would likely also sell the property. Thus I do not feel irresponsible for having no insurance cover. We have contigency plans already in place.

Thats good as long ... you know the impact of no life cover, and what your plans/expectations are if the unfortuante happens whilst mid mge term. It also appears that you have discussed and satisifed yourselves that neither of you have a desire or need to effect provision for the surviving partner on death .... which although not everyone's way of approaching the matter, at least demonstrates that you have given it due consideration and thought - which is still to be commended.

Hope this helps

Holly

Thrugelmir

silversnail wrote: »

My partner would be in a different position however, and would be unlikely to be able to continue in his line of work if he didn't have my income to sustain him on a day to day basis; thus he would likely also sell the property. Thus I do not feel irresponsible for having no insurance cover.

If the situation had arose. Losing the house at the same time as a loved one. May have put a different complexion on matters.

Life is so easy with hindsight.

silversnail

I am sure you are right about moving house at the same time as losing a partner, and this too is something we discussed. However everyone approaches homes and relationships in different ways!!!!!
Once again thank you everyone for your wise input (not sure I understood all the abbreviations you used Holly though, but got the gist of what you were saying) and perhaps having mortgage insurance is more common than me and my friends believe!
Also you are right on not noticing the direct debit coming out every month - now that IS stupid and I won't make that mistake again!!!!

hcb42

what if after death, you couldnt sell the house for 2-3 years, could the other partner survive then? Most people want the debt to be cleared immediately, hence what the life assurance is for.

I have also switched mortgage many times, but not switched life assurance, as it makes no sense to do so, premiums only go up as you get older - but I would not call life assurance for a major debt as money down the drain.