mortgage linked life insurance

gammoguard

Hi.
New to the forums so apologies if this has already been answered before or is in the wrong forum.
What I would like to know is until about 12 months ago my wife and I had a mortgage with a linked life insurance policy (decreasing term = decreasing sum pay-out but payments per month were always the same amount). We sold our home but as we couldn't find anywhere to buy we simply put all of our belongings into storage and lived with parents for a while until renting a property towards the end of last year.
At the time of closing our mortgage we received a letter from the bank (Halifax) stating that although we no longer had a mortgage our policy would still run providing the same cover as if we still had the mortgage - is this correct? To protect myself, wife and children I have continued to pay the monthly premium but am I doing the correct thing or should the policy have been automatically terminated because I no longer had a mortgage?
Many thanks in advance for any help or info that's given.
Chris

dunstonh

At the time of closing our mortgage we received a letter from the bank (Halifax) stating that although we no longer had a mortgage our policy would still run providing the same cover as if we still had the mortgage - is this correct?

Yes it is. That is why they wrote to you saying as much. Life assurance is not linked to the mortgage. You may set it up so it matches the requirements but there is no direct link.

To protect myself, wife and children I have continued to pay the monthly premium but am I doing the correct thing or should the policy have been automatically terminated because I no longer had a mortgage?

having a decreasing term assurance for family protection is probably not a good idea. Plus, Halifax pricing is not very good. So, you should look at what you actually need and get a policy that fits your requirements rather than fudge it with an old plan that wont.

gammoguard

Thank you. We were in the process of reviewing this cover with one of their advisors in a branch who stated to us that we had started the policy with dependants cover (even though when it started we didn't have any children) - HE actually quoted to us that this policy had probably been mis-sold because of that fact. He tried to obtain more details from his supervisor (but couldn't due to the supervisor being tied up) so would find out the details and let us know - unfortunately within the next couple of weeks he and all other financial advisors in every branch were made redundant. I was told to call the insurance lines number where I explained what had been told to me in branch only to be told no we haven't mis-sold it as its a free cover - again is this a correct statement?
Thanks
Chris

dunstonh

We were in the process of reviewing this cover with one of their advisors in a branch who stated to us that we had started the policy with dependants cover (even though when it started we didn't have any children) - HE actually quoted to us that this policy had probably been mis-sold because of that fact.

That is not a reason for mis-sale. The bank can only sell its own product range and if the product had dependants cover then so be it. A number of providers have dependents cover included in them. A number do not. it is not something that you can add or remove. Its a fixed feature from that provider.

unfortunately within the next couple of weeks he and all other financial advisors in every branch were made redundant. I was told to call the insurance lines number where I explained what had been told to me in branch only to be told no we haven't mis-sold it as its a free cover - again is this a correct statement?

The line is correct as per above. Thank goodness that adviser was made redundant. You were given duff info. Not uncommon from banks.

gammoguard

Again thank you :-)