New insurance laws wef August 2016 & life insurance

Skint_yet_Again

Several years ago I took out £44500 level term assurance for my mortgage. This is due to expire 23 April 2016 as the mortgage would have been paid off by then.

The cost is £7.27 a month and my outstanding mortgage balance is now £30391 (repayment mortgage)

I have since divorced and my son currently aged 20 will inherit the house, but I am not sure he would be able to get a mortgage so I want to cover the outstanding amount. I have other death benefit from pensions and union to cover other expenses. When the property was transferred to me as part of the divorce settlement I extended the term of the mortgage when I took it on in my own name for affordability reasons.

I am unsure whether to take level term assurance again or mortgage life insurance. I have read Martins guides but I also note that there are new laws coming into effect in August 2016.
Since taking out my first life assurance I have developed several health conditions including type 2 diabetes.

I am unsure what impact these new insurance laws will have on me. Should I delay taking out new cover until August 2016 (this would worry me as I would have no cover on the mortgage balance from April to August)
Can anyone advise ?

rs65

If you are talking about the Insurance Act 2015, I thought it only affected commercial insurance.

Skint_yet_Again

Not according to Martin/MSE - see step 5 on the link below

http://www.moneysavingexpert.com/insurance/cheap-life-insurance

and the link here states it apply to all insurance products

http://www.moneysavingexpert.com/news/insurance/2015/02/new-insurance-laws-will-stop-insurers-wriggling-out-of-claims

Just not sure how this affects me in my situation with medical conditions when applying for a new policy next year

rs65

Have a read here and see if you think anything affects you

http://www.clydeco.com/insight/updates/view/the-insurance-act-2015

Skint_yet_Again

Thanks r65 .... but there's no hope for me - I'm confused by the first paragraph :rotfl:

MSE states:

Insurers will be unable to unfairly reject customers' claims because they have given the wrong information about an irrelevant element of their policy after the Insurance Act 2015 was enshrined in law. However, the new Act, which covers all insurance products, will not come into force in England, Wales, Scotland and Northern Ireland (with a few minor exceptions in NI) until August 2016.
So in the meantime, make sure you disclose all relevant information and check all your policies are correct when taking out insurance products

From the link you sent above

These changes will apply only to business insurance

Aretnap

rs65 wrote: »

If you are talking about the Insurance Act 2015, I thought it only affected commercial insurance.

I think the part on warranties and other terms applies to both consumer and non-consumer contracts.

The main effect is that a breach of warranty or terms will only be grounds for rejecting a claim if the breach is relevant to the claim. So if your life insurance policy has a clause which says you're not allowed to go base-jumping the insurer will still be able to refuse to pay out if you die in a base jumping accident - but if you die of cancer they won't be able to refuse to pay out just because they find out that you once went base jumping.

The practical effect on consumer contracts will be minimal because the Ombudsman and the FCA already apply this rule - so all the Act does is formally enshrine existing regulations and codes of practice into law. And modern policies are more likely to have a specific exclusion that says "we will not pay if you die in a base jumping accident" than a clause which says "you must not go base jumping" anyway.

The MSE article is misleading as it seems to imply that the duty to disclose information will change. It won't - at least not as far as consumer contracts are concerned. So if the OP's wondering whether he'll be able to keep his diabetes quiet when he applies for insurance next year, no he won't. Failing to disclose it (if asked) will still potentially invalidate any claim, even one which is not related to diabetes, as non-disclosure before taking out the policy is not dealt with in the same way as breaching the terms and conditions after taking it out.