Decreasing Term Assurance (DTA)

anandp

Hi,

Just read through loads of these threads, with some specific to DTA.
An offer has been received from the FSCS, however a substantial chunk has been subtracted for DTA.

I understand the need for DTA on a repayment mortgage is to cover the principle loan on death so that dependents have the ability to repay.

In this case, there were and are dependents, however, there were also other life policies in place.

The situation is as follows:

Loan: 45k
Life insurance in place during mortgage term (some taken out before, some during): £20k-35k

Obviously the insurance in place doesn't cover the full loan, however I would have expected some allowance to be made for the fact that some life insurance was in place.

Is this not logical?

homer_j_3

I think you will need to explain more clearly what you mean.

dunstonh

this case, there were and are dependents, however, there were also other life policies in place.

If there is no spouse/partner and no children then you can argue your case.

In this case, there were and are dependents, however, there were also other life policies in place.

As there are dependents then there is a need for the life assurance so its only fair the insurance cost is included.

If the other insurance policy pre-dates the endowment and covers the full amount you "may" have a case to argue but if the other policy or any of the others were arranged after the endowment then you have no chance. If the other life policy is for family protection it wont count either. Death in service benefits are not inlcuded as well.

Is this not logical?

The way you have worded it, no.

You dont appear to have had enough cover in place as the loan was 45k and the other life cover was less than that, not all arranged before and you havent allowed for further protection above the loan.

anandp

Thanks for your reply.

You're right - the cover that is in place does not cover the time period of the mortgage exactly, however, there is at least half the cover in place with other life assurance policies throughout the duration of the mortgage.

I would have thought that this would present a case for at least some of that DTA allowance to be added to the compensation but apparently not, since none of the cover in place is shown to be specifically for the mortgage.

What is most frustrating is that I do not think I would have necessarily taken out additional DTA cover, as this is optional, and with my lender, they have never had it mandatory.