Decreasing mortgage Cover plan

angelbabey

Hi there,

I seeking help understanding whether my policy is the right one for my mortgage. It includes critical illness cover and reduces as the plan term. I pay like £47.69 pm. i have seen cheaper plans, but when i tried to cancel the policy i was told that i couldn't, it comes as part of the Mortgage. My question is, is a decreasing policy the right way to go. I have 2 children who will benefit it i become ill. I am in good health and don't smoke. I am really confused. :think:

kingstreet

I cannot see why you would not be able to cancel such a contract, should you wish to do so.

Who told you it couldn't be done and that it "comes as part of the mortgage?"

Life and critical illness cover is a separate plan written by a firm separate to the mortgage. Although the lender may have its own pet life office, they are separate legal entities.

A broker arranging cover for you may have asked you to sign an agreement to repay some of the commission clawed back if you were to cancel early. Is this the case?

Please tell us how you came to buy this cover and the name of the insurer.

In general, decreasing cover is perfectly suited to mortgage repayment. The amount of cover drops as the mortgage is repaid. This makes it the cheapest way of meeting such a need. We can't tell you if the plan you have is good value, as we aren't party to your circumstances. It may be worth a chat to an IFA to see if there are better/cheaper options.

You tend to find tied agents and bank/building society branches sell the most expensive cover which may not be the best cover available. An IFA has access to the whole market and can obtain the best cover at the most competitive prices.

dunstonh

I cannot see why you would not be able to cancel such a contract, should you wish to do so.

I wonder if it is because a broker with commission offset against fee was used?

i have seen cheaper plans

cheaper is not always better. e.g. moving from comprehensive CI cover to budget CI cover. Or guaranteed premiums to reviewable premiums. Equally highest cost is not always best.