Miss sold life insurance

Annmarie1503

Hi could anyone help me.my husband and I took out a mortgage in 2005.We where told we had to both take out life insurance in order to get the mortgage,even though we told the advisor that we both had good local authority pensions that also included life insurance that would more than cover the mortgage.we where told that the policy was mortgage decreasing life insurance,we have recently discovered that we did not have to take the policy out it was not a condition of the mortgage as we where lead to believe and it is just a normal life insurance not mortgage decreasing insurance as we where told.I feel that we have been miss sold a policy that we didn't want or need.Could we have a case for a policy being miss sold.If anyone could help a would really appreciate it.
Thanks.

dunstonh

Could we have a case for a policy being miss sold.

Virtually no chance.

You almost certainly have no evidence to support your allegation. So, that is easily rejected. They will then look at suitability of the product and if you had a need and you clearly did. (death in service is not generally considered suitable for mortgage provision).

If you have evidence then you may have scope. However, many mortgage advisers require the purchase of insurance to give free mortgage advice. That model is allowed. So, they can insist on insurance as long as you have a financial need for it.

jonesMUFCforever

So you die whilst working and the death in benefits pays out - what then would you live on and could you afford your present lifestyle with one income?

magpiecottage

Leaving aside the fact that your life cover would have ended if you left your job, do you know exactly what you would have received on death?

In the early years of employment it is not very much in the Local Government schemes.

In theory, there may be a case for misselling in respect of a level rather than a decreasing term assurance but the difference is likely to be relatively small.

Annmarie1503

Thank you for your advice,I am not sure if the fact that we both have a death in service grant of £170000 and did so at the time of taking out the insurance policy makes a difference.The mortgage was for £44000 the property was worth £130000 and we could both afford the mortgage on our own without it having any major impact on our life styles,We had lived comfortably on one salary for many years when I was bringing up our children.

dzug1

magpiecottage wrote: »

Leaving aside the fact that your life cover would have ended if you left your job, do you know exactly what you would have received on death?

In the early years of employment it is not very much in the Local Government schemes.

.

3 years pay not very much??

kingstreet

In the "good old days" we used to use a 9:1 ratio for return on capital to replace deceased income.

On that basis, you need £270k to replace a £30k pa income, where 3 x salary DIS would give only £90k.

There would be a WDIS pension to take into account, but you get the gist, I'm sure.

Either way, it's normally the case you would leave DIS benefits for family protection and use a cheap decreasing term for the amount and term of the mortgage to pay it off on death.

The OP needs to read their sales documentation, specifically the suitability letter to see how the advisor justified their recommendations. I'd also like to know if this was life cover only and the monthly premium paid.

Annmarie1503

In the early years of our mortgage our death in service grant would of been £78000, lump sum and a pension each month that would of more than covered our mortgage,but we have always been able to afford the mortgage on a single salary.we where also told by the advisor we had to take out ppi and terminal/ critical illness cover which was also incorrect.

Annmarie1503

It was terminal illness and life cover the premium is fixed at £39.78 per month.and was also a fixed term of 15 years.if we had wanted to take life
insurance out of our own choice. we would of opted for whole life not fixed.
Thanks again for all your help.

dunstonh

I am not sure if the fact that we both have a death in service grant of £170000 and did so at the time of taking out the insurance policy makes a difference.

Death in service is there to go some way to replace lost pension benefit and future income. It is typically between 1 and 4 times salary. So, once you take that objective into account, there is nothing left over to cover debts. So, there is easy justification for the sale of a life assurance policy to cover a debt.

If you have children, as it suggests you have, then figures around 10x income are considered the ballpark for life assurance requirements. So, death in services will be way below that.

we where also told by the advisor we had to take out ppi and terminal/ critical illness cover which was also incorrect.

How was it incorrect? Many mortgage advisers require you to purchase insurance via them to get free mortgage advice. That model is allowed.

Terminal illness for most of the last decade has been a free inclusion on life assurance.

It was terminal illness and life cover the premium is fixed at £39.78 per month.and was also a fixed term of 15 years.if we had wanted to take life
insurance out of our own choice. we would of opted for whole life not fixed.

You may have opted for that but a whole of life policy would almost certainly have been classed as a mis-sale if the adviser had recommended it. Fixed term was the correct solution.

kingstreet

Please refer to the reasons for the cover set out in your sales documentation, specifically the suitability letter.