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Life insurance

Dalebal4
Dalebal4 Posts: 1 Newbie
in Loans
Hi all,

looking for some guidance, 3 years ago my wife applied for a loan and was made to take out life insurance in order to be approved. My question is was this legal? or is this another mis-sold item by the bank?
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Comments

  • [Deleted User]
    [Deleted User] Posts: 35,242 Forumite
    Part of the Furniture 10,000 Posts Photogenic Name Dropper
    It depends, for a start, on whether life insurance was a condition of the loan.
  • Nearlyold
    Nearlyold Posts: 2,387 Forumite
    Tenth Anniversary 1,000 Posts Name Dropper Combo Breaker
    Is this a business loan or a consumer loan?
  • [Deleted User]
    [Deleted User] Posts: 26,612 Forumite
    Eighth Anniversary 10,000 Posts Name Dropper Photogenic
    Only three years ago, the PPI mis-selling scandal would be at the forefront of anyone selling such loan add-ons. I'd be most surprised if anyone would win a mis-selling complaint about life insurance added to a loan. The paperwork will be thorough and clear and it does sound like it was a condition of the (business?) loan.
  • iolanthe07
    iolanthe07 Posts: 5,493 Forumite
    Taking out life insurance is a usual condition for obtaining a mortgage, so if it was in the T & C's of the loan agreement then I don't think it can be illegal.
    I used to think that good grammar is important, but now I know that good wine is importanter.
  • PeacefulWaters
    PeacefulWaters Posts: 8,495 Forumite
    iolanthe07 wrote: »
    Taking out life insurance is a usual condition for obtaining a mortgage.
    It really isn't.
  • [Deleted User]
    [Deleted User] Posts: 0 Newbie
    Fifth Anniversary 1,000 Posts Name Dropper I've been Money Tipped!
    PeacefulWaters wrote: »
    It really isn't.

    Well it CERTAINLY was for the 4 mortgages we had from the early 80s onwards
  • PeacefulWaters
    PeacefulWaters Posts: 8,495 Forumite
    venison wrote: »
    Well it CERTAINLY was for the 4 mortgages we had from the early 80s onwards

    Welcome to 2016.
  • iolanthe07
    iolanthe07 Posts: 5,493 Forumite
    PeacefulWaters wrote: »
    Welcome to 2016.

    A genuine question - Do mortgage lenders really not insist on life insurance these days? How do they cover the risk of the borrower dying? I haven't had a mortgage since 1994, so accept that I am out of touch, but life cover was essential then; you couldn't get a mortgage without it.
    I used to think that good grammar is important, but now I know that good wine is importanter.
  • magpiecottage
    magpiecottage Posts: 9,241 Forumite
    1,000 Posts Combo Breaker
    iolanthe07 wrote: »
    I haven't had a mortgage since 1994, so accept that I am out of touch, but life cover was essential then; you couldn't get a mortgage without it.
    Yes you could.

    Generally building societies have never insisted on life cover for repayment mortgages although, by definition, endowment mortgages had an endowment life policy as a condition and they wanted life cover for other interest only arrangements.

    On the other hand, banks did insist on life cover.

    However this requirement was gradually lifted as competitive pressures forced their hand.
  • foxy-stoat
    foxy-stoat Posts: 6,879 Forumite
    Eighth Anniversary 1,000 Posts Name Dropper
    iolanthe07 wrote: »
    A genuine question - Do mortgage lenders really not insist on life insurance these days? How do they cover the risk of the borrower dying? I haven't had a mortgage since 1994, so accept that I am out of touch, but life cover was essential then; you couldn't get a mortgage without it.

    Normal procedure is that the house is sold, mortgage is paid and the balance of equity, if any, goes into their Estate.
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