Life insurance for Mortgage

Jimbo27

Good evening,

I suspect I know what the answer is, I should have paid more attention, but I'm annoyed by this.

About four years ago we re-mortaged when we had a garage converted. There was about 20 K increase in the mortgage. We did it over the phone with Halifax. As part of the process we got life insurance to pay the mortgage off if required. Looking at the bank statements a few weeks ago we realised that we were still paying the insurance premium on the mortgage that had been re-mortgaged as well as the new one.

I tried ringing the old insurance company and they have said that as the insurance would have paid out, then there wasn't any way I could get the premiums back. This is annoying, but I can see their point, they don't know that I've started paying on another insurance.

I don't honestly recall what conversation led to the new insurance being taken out. Whatever was said, I'm sure we would have wanted cover of some sort, but looking at it now it seems wrong to me that my original insurance wasn't taken into account. If I had an insurance in place to pay a mortage that would still pay out when I changed the mortgage, then surely the cover available from that should have been considered when I took out the new one and that I should have had an opportunity to get cover to just make up the difference between the old and new insurance policies?

I know and I can see the argument that says I took out a mortgage and insurance, it was my responsibility to cease cover on the old insurance, but that feels unfair to me. When I originally took out the mortgage and insurance it was done as a job lot, when I re-mortgaged over the phone the mortgage was also done with the insurance, so it seems wrong that when I should have stopped the insurance, all of a sudden it is nothing to do with the people I am dealing with and they are treated entirely seperately.

Does anyone have any advice / opinion?

Thanks

hcb42

I dont know how the mortgage provider would know about your previous insurances...I am pretty sure mine wouldnt..

Jimbo27

But wouldn't they expect you to have some? They know it is a re-mortage so shouldn't the question be asked, "do you have insurance on your current mortgage?"

hcb42

Yes, i would expect the question to be asked - but you admit you cannot recall...

what does your paperwork say, the one with the key facts on etc?

Annisele

Life cover isn't like car insurance - if you insure your car twice with two different insurers, you won't get 2x the car value if you write it off. However, if you have two different life cover policies and drop dead, they will both pay out.

If you have a need for life cover at all, then it's pretty hard to have too much of it. Presumably there's somebody who'd lose out financially if you died (or why bother protecting the mortgage), so you might well need additional cover for the benefit of that somebody. Ultimately, it's your responsibility to make sure the life cover you've got is appropriate for you.

Having said that, if you've had repayment mortgages you may well have ended up with two decreasing term assurance policies (where the amount of cover decreases over time, to match the decreasing balance of a repayment mortgage). That's likely not particularly useful.

I don't think you have any chance whatsoever of getting any money back on the previous policy, but you might want to use this as an opportunity to review your life cover in general -if these are the only two policies you have, they might be insufficient.

Nathan_J

... but looking at it now it seems wrong to me that my original insurance wasn't taken into account.

Jimbo27, this is a cracking example of the difference between financial advice and being sold a product.