Mis-sold life insurance for mortgage?

chattykathyblue

Hi

We've been clearing out some paperwork today and I've come across a life insurance policy that my husband was paying to Norwich Union. It was when we weren't together, he had no dependents BUT he had ( and still has) a very generous death in service benefit from his company - this would equate to easily twice as much as the mortgage was then. He said he was told he had to have it and paid £58 per month for 5 years - he has since paid off the mortgage. My point is he didn't need to pay for this as his death in service benefits would have easily paid the mortgage off. Do you think he has a case of claiming that he was mis-sold this insurance and in which case should he just contact Norwich Union?

Any advice will be appreciated

TIA

dunstonh

He said he was told he had to have it and paid £58 per month for 5 years -

That sounds very high for just life assurance. Does he have a history of poor health or was in his 50s at that time he took it out?

Or it could be that its not just life assurance but Life & critical illness cover.

Do you think he has a case of claiming that he was mis-sold this insurance and in which case should he just contact Norwich Union?

Death in service is irrelevant. its not meant for debt provision. Its aim is to cover short term loss of income and help towards lower pension benefits. It is also discretionary and not guaranteed. So, its normal for it not to be included to cover a debt. It is normally included to cover income loss/pension loss.

Historically, I would have said if its life only then he could well have been missold. However, I saw a FOS decision not too long back which rejected a complaint on that basis as they said a mortgage is a long term contract and it would not be unreasonable to expect him to be in a relationship or have children sometime during the term of the mortgage.

If it is life & CI cover then its not missold as adding in life assurance on top of CIC is often a no cost addon or just pennies per month. Its a no brainer to add it on.

chattykathyblue

Thank you for your thoughts. Yes, he was in his 50s and on checking he did have CI cover too. Is it usual to have to take out such an insurance in order to have a mortgage then?

I can understand what you say about death in service benefits but surely the family COULD have used the money to pay off the mortgage upon his death?

dunstonh

Yes, he was in his 50s and on checking he did have CI cover too.

The cost is the CIC part. Having the life assurance added is common sense.

s it usual to have to take out such an insurance in order to have a mortgage then?

Nobody has to to anything nowadays (the need for compulsory life assurance was largely over by 2003 - although you still often see it with commercial borrowing). However, most people take out insurance to cover their mortgage. That is quite normal.

I can understand what you say about death in service benefits but surely the family COULD have used the money to pay off the mortgage upon his death?

It's irrelevant. The cost of the life assurance would have been zero to pennies per month. It is a no-brainer to include it when you have CI cover. Especially when looking at a long-term debt.

chattykathyblue

That's the point, he was told he had to life assurance and the policy happened to have critical illness cover as well which he's just told me he didn't know he had.

dunstonh

chattykathyblue wrote: »

That's the point, he was told he had to life assurance and the policy happened to have critical illness cover as well which he's just told me he didn't know he had.

What evidence exists to support the allegation he had to have it?
- Chances are there is none. So, a complaint would be upheld on an unprovable allegation. It then falls back to suitability checks and clearly, it is suitable. So, it would be an easy complaint rejection.

If he used a broker/adviser (rather than a bank) then is this before 14th Jan 2005?
- If yes, then that makes it pre-regulation and the complaint wouldn't even need to be considered. It could be rejected as pre-regulation.

chattykathyblue

Thank you :beer:He has a lot of thinking to do.

-taff

Life insurance was a bolt on for critical illness cover. It wasn't the other way round because the critical illness cover would have been the more expensive of the two.
I was single with no dpendants and was sold/bought a critical illness cover with a bolt on life insurance [years ago now]
I wasn't missold because the critical illness cover was a choice I made.