Life Insurance

Miss_Poohs

I'm not not sure if here is the best place for this question but it relates to a mortgage....so here goes.
A friend of mine has a joint mortgage with her husband for their home. The mortgage still has another 15 yrs or so to go on it.

Sadly....she has been diagnosed with incurable cancer, although they are hopeful she will respond well to treatment.

They were looking to see if they would be able to claim on their critical illness cover (which they can't), but more disturbingly they discovered that my friends insurance doesn't cover her for the term of their mortgage!! It runs out in approx 18 months, and obviously now it will be virtually impossible for her to buy new life insurance.
The mortgage and insurance were set up by a mortgage adviser, surely this can't be right?

dunstonh

They were looking to see if they would be able to claim on their critical illness cover (which they can't)

why not?

but more disturbingly they discovered that my friends insurance doesn't cover her for the term of their mortgage!! It runs out in approx 18 months, and obviously now it will be virtually impossible for her to buy new life insurance.
The mortgage and insurance were set up by a mortgage adviser, surely this can't be right?

Normally, the recommendation for life assurance would match the term of the mortgage. Differences only tend to occur if people have remortgaged over the years and adjusted either the amount borrowed or extended the mortgage term. If that is not the case, then she should refer back to the original documentation which should explain the reasons why the term was selected.

Miss_Poohs

They can't claim on critical illness because she's incurable not terminal - and the doc can't give a timescale.
She starts chemo in the very near future, so i guess a lot will depend on how she responds to treatment.
Oddly enough it's only her that's affected like this her husband is covered for the whole mortgage term - it seemed very odd to me - but I'm no expert.

ACG

Your confusing terminal illness and critical illness I think.
If your friend has Critical Illness cover then I would be questioning why they can not claim.

I would go back to the broker and be questioning why there was a shortfall in the term. It does seem strange as life insurance is relatively cheap so I would struggle to believe its because of a cost issue. If they are not happy with the reply, they can make a formal complain and take it to the ombudsman if they wish but its important they go tot the broker first to find out why the term was selected.

Miss_Poohs

They won't deem her as terminally ill though ACG, she's incurable!! They did phone to check insurance and that was the answer she got, incurable isn't terminal - I know seemed brutal to me too.
I said exactly the same about the insurance, it just doesn't seem right to me. I'd be going back for an explaination. They started each mortgage they've had as a couple so why are they different now - odd I think.

ACG

They are correct, incurable isnt terminal. Terminal usually means they are expected to pass away within 12-18 months. Unless your friends surgeon is prepared to put that in writing they are not going to be able to make a claim on the life insurance.

If they had had Critical Illness and the cancer had met the defiintion of the policy then they may have been able to make a claim.

So unless your friend does pass away before the policy end date, they are going to be unable to make a claim.

The other path here is the one regarding the term of the policy. This will enable your friends to potentially get something if there is a valid complaint - however the claim would be made against the broker rather than the life insurance company.

dunstonh

They can't claim on critical illness because she's incurable not terminal - and the doc can't give a timescale.

Critical illness cover and terminal illness cover are two different things. Critical illness cover pays out on diagnosis as long as you live for at least 28 days after.

Terminal illness pays out if you the doctor believes you have less than 12 months to live (and are not in the last 12 months of the plan).

Oddly enough it's only her that's affected like this her husband is covered for the whole mortgage term - it seemed very odd to me - but I'm no expert.

So, do they have two policies then? (1 each)

Miss_Poohs

Thank you both so much.
The doctors hope she will respond well to treatment and I sincerely hope she will have at least few more good years - she's not even 50 yet!!
I still have trouble believing it myself.
Dunstonh - I'm assuming it's separate policies, I'm not 100% sure. What she said was if she lives a couple more years the policy will be finished and she will be uninsured meaning her husband will be left to pay the mortgage alone, which on his salary is possible but being that he does mainly agency work he's not going to get much time to stop and regroup, as he's not entitled to sick pay.
Once again thank you both for your help, much appreciated.