Life Assurance Issues

edited 30 November -1 at 1:00AM in Reclaiming Mortgage Fees, Council Tax, etc
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warwick2001warwick2001 Forumite
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Hope this is the right place to post this. If not, please could a moderator moved to the correct forum. Thanks


So... long story long, as they say. My partner bought a house and took out a mortgage with an ex-boyfriend in 2005. Part of the conditions for the mortgage was to have life assurance, which was taken as a joint policy, but he was the main policy holder.


In 2008, they split, she kept the house, and converted the mortgage into her name only (I'm not sure whether this was a re-mortgage, or purely just a name change on the account. It was with the same lender, HSBC). However, the life assurance policy was basically forgotten about (this policy is with Norwich Union).


So, 6 years down the line, we are going through our finances, and we find the life assurance policy. I suggest she ring and cancel it, as she is obviously no longer with him, and the mortgage hasn't had his name on it for 6 years (making the life assurance policy invalid?), and open a new policy with just her on it as the policy holder. She rang Norwich Union, but they will not let her cancel the policy, as he is the main policy holder, and in order to cancel she would need his signature as an agreement. The main problem with this is that they have not been in contact since the split, and she has no reason to change this. (Relationship didn't end well)


So, is Norwich Union right in not letting her cancel the policy? I am under the impression that the original policy (with both their names on it) is no longer valid as he has nothing to do with the mortgage. Now, I accept that the life assurance is a stand alone product, but it was only taken out as it was a proviso of the original mortgage (and as I stated, the mortgage is now in her name alone).


To make things just a bit more interesting, even though he is named as the main policy holder, it is paid for by her bank account. So surely she can cancel the policy, as she is paying for it? Or, if this would breach the terms of the mortgage, surely she could have his name dropped from the policy, as he has nothing to do with the mortgage?


Sorry for the long winded explanation, but I thought it would be best to list all the facts.


Thanks for reading, and for any help you can offer

Replies

  • roonaldoroonaldo Forumite
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    It was not a requirement by HSBC in 2005 to have life insurance. HSBC's life cover has been optional.

    The policy cannot be cancelled without the ex-partners authority as he is a policy holder, the policy is still providing him with cover. It doesnt matter that he's not on the mortgage anymore, its not a requirement to have a mortgage, he may have a mortgage elsewhere or just still want the cover. HSBC are correct in not cancelling it. If the policy were cancelled and he died and its found out the policy was cancelled without his authorisation then someone is going to be in big trouble.

    Cant she just cancelled the direct debit and the policy will lapse due to non payment? if not then she will have to get in touch with the ex-partner.
  • warwick2001warwick2001 Forumite
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    Thanks for the reply Roonaldo.

    So if she cancels the direct debit, this will automatically cancel the policy due to non-payment? They wont try and continue getting the money through a CCJ or something like that?

    And if she does cancel the direct debit, will this affect her credit rating due to non-payment/breaking a contract?

    Not that its hugely important, but the life assurance is not with HSBC, its with Norwich Union. I have discussed it again with her after your reply, and I think what the policy is is Critical Illness cover, not life assurance (unless, of course, these are the same thing, but I doubt it). She is adament that it was a condition of her mortgage, however this was 10 years ago, so her memory could be mistaken.
  • kingstreetkingstreet Forumite
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    There is no contractual obligation to continue a life and/or critical illness plan if it is no longer required.

    If the DDM is cancelled, the policy will lapse after the insurer writes a few times asking for the outstanding premiums.

    There is no credit agreement, so nothing on credit file. Mortgage lender will not have an issue and won't be made aware by insurer.
    I am a mortgage broker. You should note that this site doesn't check my status as a Mortgage Adviser, so you need to take my word for it. This signature is here as I follow MSE's Mortgage Adviser Code of Conduct. Any posts on here are for information and discussion purposes only and shouldn't be seen as financial advice. Please do not send PMs asking for one-to-one-advice, or representation.
  • warwick2001warwick2001 Forumite
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    kingstreet wrote: »
    There is no contractual obligation to continue a life and/or critical illness plan if it is no longer required.

    If the DDM is cancelled, the policy will lapse after the insurer writes a few times asking for the outstanding premiums.

    There is no credit agreement, so nothing on credit file. Mortgage lender will not have an issue and won't be made aware by insurer.

    Thats great news. Thanks very much for your reply.

    Will get the girlfriend to ring the bank tonight to cancel the direct debit
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