Has life insurance for an endowment mortgage ever been compulsory?

kimyeo

Last year I made a claim (before the PPI deadline) for mortgage life insurance miss-selling, not quite PPI but gave it a go. In summary, we took out an endowment mortgage in 1984. The solicitor at the time (now not locatable..) sourced a mortgage deal with Birmingham Mid-Shires. Part of the deal included life insurance for my wife and I, which we were advised was COMPULSORY. We have no record of that in writing, but continued to pay a monthly premium for the full term of the mortgage, 25 years. The result of the PPI claim came back from Birmingam Midshires as not a valid claim. I have some months to take it further. My question is really about, was it compulsory to have life insurance for an endowment mortgage in 1984 and more importantly, if not, is it worth pursuing a case without documented evidence against a solicitor probably not practicing or even alive now?

-taff

Doesn't matter. Some companies/mortgae advisors got you mortgages in exchange for you buying their insurance, some didn't, and unless you actually have it in writing that it was compulsory, then you have no complaint. And mortgage advisors were not regulated prior to 2004.

Old_Lifer

An endowment is a life policy.

Old_Lifer

To give you a fuller explanation and as this was 1984 and using a £10,000 mortgage as an example, the life cover within the endowment mortgage  would have been arranged in one of two ways:

If you had a traditional endowment mortgage  (what became known as a 'full endowment mortgage') you would have had a £10,000 endowment (i.e. it would have had a sum assured of £10,000).  If 'with profits', bonuses would have been added to the sum assured.  This type of endowment mortgage would be guaranteed to repay the original mortgage in full provided all premiums were paid throughout the term,  since the sum assured  was the same as the mortgage amount.  However,  these mortgages were expensive and few people would have had a full endowment mortgage.

The vast majority of  people would have had a low-cost endowment  mortgage  (effectively a budget  version of an endowment mortgage), where  for a 25 year term,   the  actual endowment would  have been around £4500 or so,  to which term assurance would be added to raise the sum assured to £10,000.  These  endowment mortgages were much cheaper than a full endowment   mortgage  and in terms of cost, compared well with repayment mortgages. These  low-cost endowment mortgages were widely sold  and it is with these motgages that shortfalls occur.

Life assurance  tax relief  ended in 1984 but continued  for existing policies.  If you took-out the policy early in that year, you may have received  life assurance tax relief for the whole of the 25 year term.  You would not have needed to claim this, it would have  been given at scource  i.e. the Life Office would collect a lower premium than that which appeared in the policy schedule.

I am not sure from your post whether or not you took -out a further policy at the time but as has already been said , this was long before Regulation came in, so who knows what you may have been required to take-out in order to obtain the mortgage.

Sadly, I  can see little point in pursuing this futher.

SonOf

Has life insurance for an endowment mortgage ever been compulsory?

Yes.  There is actually no such thing as an endowment mortgage.  It was an interest only mortgage that was often coupled with an endowment policy (which is a life assurance policy).  However, where alternative repayment vehicles were used, banks would still often require life assurance as a condition of borrowing.   Most banks started to remove the condition in the mid 90s and only a few stragglers carried on into the early 2000s.  You do still see it today with commercial borrowing.

In summary, we took out an endowment mortgage in 1984. The solicitor at the time (now not locatable..) sourced a mortgage deal with Birmingham Mid-Shires. Part of the deal included life insurance for my wife and I, which we were advised was COMPULSORY.
Key things to note there.
1 - the solicitor was the party liable for the advice you were given. However, 1984 is 4 years before regulation of financial services.  So, the solicitor does not have to consider your complaint.
2 - 1984 would have seen life assurance as being a requirement.

. The result of the PPI claim came back from Birmingam Midshires as not a valid claim
Which is entirely logical as
1 - its not PPI
2 - The building society was not the party that sold the mortgage.

My question is really about, was it compulsory to have life insurance for an endowment mortgage in 1984 and more importantly, if not, is it worth pursuing a case without documented evidence against a solicitor probably not practicing or even alive now?
1 - yes it was compulsory
2 - its not worth it as you have no-one to complain to.
3 - the sale was pre-regulation.
The whole episode has been a complete waste of your time and you complained to the wrong place as well.

[Deleted User]

kimyeo said:

Last year I made a claim (before the PPI deadline) for mortgage life insurance miss-selling, not quite PPI but gave it a go. 

So you made a PPI complaint about compulsory Life Insurance that was in fact compulsory?  

You need to realise that you would only have been mis-sold if you had been told the insurance was compulsory when it actually wasn't.

 Even if the insurance was not compulsory, complaining about it only 36 years later is a particularly weak complaint for which there will be no evidence! 

PPI was Payment Protection Insurance, a policy designed to pay out in the event of unemployment and or sickness, so Life Insurance was NOT PPI!

You basically made a spurious PPI complaint about a different insurance and addressed it to the wrong recipient!

Don't waste any more time with this...