Should we have had Life Assurance or Insurance?

AlexaSY5

We took out a repayment mortgage on a commercial property in 1996 and had a Life Assurance Plan from National Australia Life to run alongside the mortgage repayments on our 10 year mortgage. I've since been looking up what Life Assurance is for and it doesn't seem to fit in with the mortgage requirements we had. Am I wrong in thinking you had Life Assurance on endowment mortgages not repayment mortgages? Are there different types of Life Assurance as what I have read about it doesn't fit in with what we had which was a regular monthly payment which went out with our mortgage payment and stopped when we paid off the mortgage. Life Assurance seems to involve investments and lump sums. Can someone clear up my confusion please???

antrobus

AlexaSY5 wrote: »

We took out a repayment mortgage on a commercial property in 1996 and had a Life Assurance Plan from National Australia Life to run alongside the mortgage repayments on our 10 year mortgage. I've since been looking up what Life Assurance is for and it doesn't seem to fit in with the mortgage requirements we had. Am I wrong in thinking you had Life Assurance on endowment mortgages not repayment mortgages? Are there different types of Life Assurance as what I have read about it doesn't fit in with what we had which was a regular monthly payment which went out with our mortgage payment and stopped when we paid off the mortgage. Life Assurance seems to involve investments and lump sums. Can someone clear up my confusion please???

Life insurance would not be unusual on a repayment mortgage. If you die it pays a sum of money to repay your mortgage. With an endowment mortgage, you pay a much larger premium to an insurance company that not only promises to repay the mortgage on death, but also to build up a sum to repay the mortgage over ts term.

AlexaSY5

Thanks but my confusion is that we had life assurance not insurance and i dont understand why !!!

lincroft1710

Life Assurance is the industry term for life insurance

SonOf

I've since been looking up what Life Assurance is for and it doesn't seem to fit in with the mortgage requirements we had.

Life assurance is easy. Its an underwritten plan with virtually no exclusions that will pay out in the event of your death. This is what most people take out with their mortgages.

Am I wrong in thinking you had Life Assurance on endowment mortgages not repayment mortgages?

Yes you are wrong.

An endowment is one form of life assurance. With a repayment mortgage you would normally have a term assurance. Up until the late 90s (early 2000s with some) it was mandatory to have life assurance with a mortgage. That is not the case any more except on some commercial borrowing.

Life Assurance seems to involve investments and lump sums.

No it doesn't. There are around 13 different types of life assurance in the UK (not including life insurance plans). Most have no investment element. Most pay a lump sum but some pay an income.

Thanks but my confusion is that we had life assurance not insurance and i dont understand why !!!

Life assurance is the correct term to use. There has been some dumbing down with retail products with some providers referring to their product as life insurance.

Level Term assurance and Decreasing Term assurance are the two most common types nowadays. Over 50s plans cannot refer to themselves as life assurance as they have restrictions. So, they call themselves life insurance.

AlexaSY5

Thanks, Google was no help whatsoever!!!!