Mortgage decreasing term assurance with critical illness

Martini45

Hi,

When I got a mortgage I had a joint life policy (Mortgage decreasing term assurance with critical illness ) with my husband. Then in 2007 we were advised in my bank also who I have the mortgage with, that my husband and I would benefit from having two separate policies. I have been sorting my paperwork and realised that as my mortgage is held jointly with my husband, the policy would only pay out once?

Have we been mis sold a product?

dunstonh

Then in 2007 we were advised in my bank also who I have the mortgage with, that my husband and I would benefit from having two separate policies. I have been sorting my paperwork and realised that as my mortgage is held jointly with my husband, the policy would only pay out once?

It can make sense with some things to have single plans. For example, the difference between joint and single can sometimes only be a few pence but you would get double the amount. Or a couple could have uneven needs which are best served by multiple policies.

Have we been mis sold a product?

You wouldnt expect it with a mortgage but it is very common on personal provision above a mortgage.

roonaldo

Martini45 wrote: »

the policy would only pay out once?

Yes as each policy its covering ONE mortgage and you can only die once. In a way as you have two policies you can benefit twice. If one policy pays out it clears the mortgage and the other party will be mortgage free.

In this case the other party also has a policy to cover them too. I expect it may have been cheaper to setup like this and you have two policies instead of one.

Not sure what is wrong with this, you obviously have a need for life insurance and you have it. Thats a good thing!

tvfreek

This is a common type of policy even today. It covers two people but for one event only. Either a Critical Illness of Death whichever comes first to whoever experiences it first.

Hope this helps.

magpiecottage

Two critical illness policies may make sense although if the policy is to cover a mortgage, then that mortgage only needs to be repaid once whether one or both of you die of fall ill.

My view would be that for family protection two policies makes sense. For a joint mortgage less so.