Mortgage endowment policy question: - divorce, death payout problems

kernow1

Another twist in the tale:
Today she received a letter from CIS which, thanks to enormous companies that do not communicate between departments, seemed to know nothing of all the recent contact and confirmed her payout would be going ahead as expected originally. So we'll see what happens!

The difference between death payment and return of premiums and full maturity is around £3500, maturity being more valuable. (She has an estimate for maturity value from a while ago telling her it would have been £21,000.)
Of course, if she had had the death payment 8 years ago that would have been much better as since then she has paid many thousands in mortgage payments which will not be returned.

Thanks again for all the input, it has been very helpful. And I'll post again at the time of the next twist in the story!

silvercar

The difference between death payment and return of premiums and full maturity is around £3500, maturity being more valuable.

Something is wrong with these figures.

Endowment policies taken out 20 or 25 years ago are now producing roughly the intended amount (forget the sales talk of a massive excess). So any death benefit that would have been paid 8 years before the policy end is paying roughly the same sort of amount, Add to that the return of the premiums (or the fact that they shouldn't have been paid for the last 8 years) and the death payout option should be much higher.

Of course, if she had had the death payment 8 years ago that would have been much better as since then she has paid many thousands in mortgage payments which will not be returned.

You should ask for an interest payment as they have had the money in the mean time. In fact they have placed themoney in the with profits fund so I don't know if you should get a payout on that basis. With endowment policies there is often an option to continue the investment in the fund without adding premiums, I wonder if you are entitled to a return on that basis ie the value of the death benefit 8 years ago invested as a lump sum in the with profits fund - as that is what has happened.

Rikki

kernow1 wrote: »

Another twist in the tale:
Today she received a letter from CIS which, thanks to enormous companies that do not communicate between departments, seemed to know nothing of all the recent contact and confirmed her payout would be going ahead as expected originally. So we'll see what happens!

The difference between death payment and return of premiums and full maturity is around £3500, maturity being more valuable. (She has an estimate for maturity value from a while ago telling her it would have been £21,000.)
Of course, if she had had the death payment 8 years ago that would have been much better as since then she has paid many thousands in mortgage payments which will not be returned.

Thanks again for all the input, it has been very helpful. And I'll post again at the time of the next twist in the story!

The endowment normally pays off the mortgage at the time of first death.

What about all the monthly interest payments still being paid on the outstanding mortgage?

CIS are only stating what should have happen and are offer the first death payment and refund all the premiums paid after that date.

This all should have happened in 1999 leaving your Mum mortgage free and no endowment to pay each month.

kernow1

silvercar wrote: »

Something is wrong with these figures.

Endowment policies taken out 20 or 25 years ago are now producing roughly the intended amount (forget the sales talk of a massive excess). So any death benefit that would have been paid 8 years before the policy end is paying roughly the same sort of amount, Add to that the return of the premiums (or the fact that they shouldn't have been paid for the last 8 years) and the death payout option should be much higher.

Well those are the figures she has been given. She has paid in £25 a month since 1999 (December) so that amounts to around £2.5k and the maturity value clears the mortgage and gives her £6k.

You should ask for an interest payment as they have had the money in the mean time. In fact they have placed themoney in the with profits fund so I don't know if you should get a payout on that basis. With endowment policies there is often an option to continue the investment in the fund without adding premiums, I wonder if you are entitled to a return on that basis ie the value of the death benefit 8 years ago invested as a lump sum in the with profits fund - as that is what has happened.

That's a good way of framing it if it comes to that, and will most probably produce a similar total...

kernow1

Rikki wrote: »

The endowment normally pays off the mortgage at the time of first death.

What about all the monthly interest payments still being paid on the outstanding mortgage?

CIS are only stating what should have happen and are offer the first death payment and refund all the premiums paid after that date.

This all should have happened in 1999 leaving your Mum mortgage free and no endowment to pay each month.

Well, yes. But as far as I can tell no one is offering to pay those mortgage payments back - and I don't know if anyone should be...?

Dick_here

kernow1 wrote: »

Well, yes. But as far as I can tell no one is offering to pay those mortgage payments back - and I don't know if anyone should be...?

The mortgage and endowment are separate things, in this case with separate companies. Until the endowment pays out and you use it to pay off the mortgage, monthly mortgage payments continue. Therefore, I see no reason for the 'excess' mortgage payments to be returned as it is only now that the endowment is paying out and the mortgage being paid off.