New Life Insurance Policy - Do i need to inform Mortgage company?

tsharp

Hi,

I've just changed my life assurance/insurance cover, from £30 a month to £8, with £50 cashback from quidco!

But my question is, having just copied to the level cover from the old policy to the new one to ensure we have the same level of coverage, do i now need to inform the mortgage providers?

Also, do I need to do the same with the Buildings Insurance company that was changed a while back?

dunstonh

I've just changed my life assurance/insurance cover, from £30 a month to £8, with £50 cashback from quidco!

That seems to much of a jump to be like for like. Its the sort of difference you expect when you leave options off or perhaps go with reviewable/renewable premiums.

do i now need to inform the mortgage providers?

No

Also, do I need to do the same with the Buildings Insurance company that was changed a while back?

No (with most of them). Some do but if they dont ask, they dont know and it can stay that way.

tsharp

Well, the only options the new policy gave were all the usual health yes/no questions etc, and the level of cover needed, which equates to the amount of the mortgage.

The Schedule for the old policy listed;

Sum Insured ; £121,600 at Level Term
Sickness and Accident Insurance; This pays out £600 a month if i am unable to work etc...

So i cannot see how i could have missed any important factors that the old one might have included. I am keen to investigate this as i don't want to under-cover myself etc....

dunstonh

Well, the only options the new policy gave were all the usual health yes/no questions etc, and the level of cover needed, which equates to the amount of the mortgage.

Did the old policy have critical illness cover, terminal illness cover and/or waiver of premium? Do these exist on the new one?

Did you choose reviewable, renewable or guaranteed premiums?

If you bought from a single company and not through a panel or whole of market source then some of these questions may not have been asked if the company doesnt offer that level of cover.

£30 to £8 is a much bigger jump in premiums then you would expect. A reduced commission quote of £8 would be about £11 on full commission from an IFA. A tied agent may be another £5-6 on top of that.

Sickness and Accident Insurance; This pays out £600 a month if i am unable to work etc...

That could be the difference. If the old plan was a full permanent health insurance and you replaced it with sickness and accident insurance then you have probably significantly reduced the level of cover and ability to claim.

What is the deferment period of the new plan for the sickness side?
How long will it pay out for? 12 months, 24 months or until retirement?
Is it budget, standard or comprehensive that you have gone for?
Reviewable or guaranteed premiums?

Compare those and that is where you are probably different.

I put money on you moving from a much better plan to one that is barely worth the money you are paying. (£8pm for life and sickness/accident is way too cheap and suggests barely any proper coverage)

tsharp

Thanks for your help, the old policy is still live, so i will compare them when i get the paperwork thru for the new one before canceling one of them.

The existing policy was sold to me when we hooked the mortgage up, and seems to increase every year. My wife's is now £40+ a month, so there would have to be a substantial difference in the cover for it to be so differently priced. I suspect that our advisor when getting the mortgage sold us an expensive policy, so i am interested in what else i can get.

dunstonh

It may be that the existing plan has index linking. That can be switched off. Many PHI policies are sold with indexation due to guaranteed insurability reasons.

Or it could be that the existing plan is a yearly renewable term assurance. They are quite good if you are in your 20s but not very good once you get past around 35.