Continuing the critical illness / life assurance policies

2numb2cry

I recently sold my house and the proceeds paid off the mortgage. The mortgage was on a repayment basis and I have three critical assurance policies with Scottish Widow that were taken out to cover the mortgage. My question is, as these policies only have 9 years to go, will they pay out at the end of the term or should I just cancel them? Your help much appreciated

dunstonh

My question is, as these policies only have 9 years to go, will they pay out at the end of the term

If you die or suffer a critical illness within that term they will pay out the applicable amount involved.

2numb2cry

So if I don't have a mortgage and I don't die or suffer a critical illness then all three policies are worthless?

dunstonh

2numb2cry wrote: »

So if I don't have a mortgage and I don't die or suffer a critical illness then all three policies are worthless?

Whether you have the mortgage or not doesnt matter. However, the answer is yes.

All insurance is useless if you never suffer the claimable event. However, they can become the best thing you ever did if you do.

2numb2cry

So how would we have been able to pay off the mortgage loan when the 9 years were up if we were only paying the interest?

dunstonh

2numb2cry wrote: »

So how would we have been able to pay off the mortgage loan when the 9 years were up if we were only paying the interest?

If you were on interest only basis then you would have a different type of policy (or combination) to meet that objective. Such as an endowment policy.

2numb2cry

Thanks dunstonh. I thought this was my endowment as the bloke who sold it to us when we remortgaged said it was " all singing, all dancing" I will need to look at my other policies as I think I might have already cancelled one.

Annisele

OP - you say in your first post your mortgage was "on a repayment basis", then you suggest you were "only paying the interest".

If it really was on a repayment basis, you probably didn't have an endowment policy. If it was interest only, then hopefully you had something.

In either case, I agree with you - looks like it's a good time to review your policies!

Gizmo247

2numb2cry wrote: »

So if I don't have a mortgage and I don't die or suffer a critical illness then all three policies are worthless?

That's insurance for you!

shonzyd

2numb2cry wrote: »

So if I don't have a mortgage and I don't die or suffer a critical illness then all three policies are worthless?

Think you may be confusing 'insurance' and 'assurance' - thats 2 different things. Insurance theres no guarantee it will happen. When you have car insurance will they pay out for a car if you never have an accident? i dont think so!

jamesd

It's not really clear enough what you have. Please try to resolve these conflicts:

1. Repayment basis mortgage but only paying interest, which would make it an interest only mortgage. A repayment mortgage would have nothing remaining to repay at the end of the mortgage term. An interest only one would have the full amount to repay. What did you have to pay off to clear the mortgage when you sold? If it was the original amount of the mortgage you had an interest only mortgage. If it was much less then you had repayment or maybe some mixture.

2. There's no such thing as a "critical assurance" policy. But maybe you meant critical to you assurance policy that would pay off the mortgage? What are the exact words on the policies?

If you can clear up 1 and say more about the exact wording on the insurance policies that would help a lot in knowing just what you have. If you do have the sort of policy that would pay off an interest only mortgage you shouldn't just stop paying because that would lose you a lot of money.