Term insurance and Mortgage

JohnD1957

Trying to work out what happened. I used a financial advisor to get a mortgage back in 1998, I was sold a Woolwich mortgage and a AVIVA term insurance for £137,000 costing close to £50 a month for the insurance. Talking to AVIVA today the term insurance only ran for 22 years and terminates in 2020 but my mortgage was for 25 years terminating in 2023 when I reach retirement age.
When I check quotes for life Insurance it should only be around £20 a month.
Do I have any grounds for complaint? I need to change the policy now as the term isn't matching the mortgage,? Looks to me was sold close to £12000 on a policy that never met my needs!

dunstonh

When I check quotes for life Insurance it should only be around £20 a month.

Checking quotes today means nothing. Life assurance today is much cheaper than it was in 1998.

Plus, you are possibly not comparing like for like. £50 compared to £20pm suggests you are not including some add ons (like critical illness cover) or there were/are health conditions that are not being factored into todays pricing.

Do I have any grounds for complaint?

No.

1 - it is pre-regulation. So, they dont have to consider your complaint.
2 - the extra 3 years would have increased your premiums. So, you have actually got away with paying less.
3 - in reality, the final 3 years of a mortgage would have a tiny balance left. So, the cost saving in the early years may well have been beneficial in real terms to a potential tiny shortfall at the end.

JohnD1957

Thanks, think I will cancel the current policy then and take out a new one as I actually need far less cover now, I can get same benefit for 1/4 of the cost and extend cover time for the whole mortgage term.


No additional benefits are on the policy, no medical conditions etc. AVIVA are sending me a copy of the policy.


I wonder how many people could now change long term life insurance policies and save a vast amount of money.

dunstonh

I wonder how many people could now change long term life insurance policies and save a vast amount of money.

Quite a lot given the way that prices fell. However, a good number of people seeing premium differences you mention usually have addons that they have failed to take into account. Most common of which is critical illness cover on the old plan but just terminal illness cover on the new one.

csgohan4

don't forget the older you are the more expensive life assurance becomes, not to mention having to declare any medical conditions which could delay or increase premiums