Can I remortgage with critical illness paying out or do I have to stay put

blackcatg

Hi Newbie at posting so forgive any errors.
I have critical illness policy with Legal & General & they are paying my mortgage for me at present after the initial struggle, I have several long term health problems & my work is in the process of laying me off. The main question I have is can I remortgage or am I tied to this original mortgage until L&G stop paying out. The CIP was bought with MPI when I took out this mortgage in 2004 from the same broker. They won't pay off the mortgage completely because they say my illnesses are not bad enough for this, (ME, Fibromyalgia, Thyroid, Depression...)
Any help would be appreciated

druss

You would have to speak to L&G, my concerns are does the mortgage protection only pay out for a specified period ie 12 months, 24 months?

if so tying yourself to another deal may not be wise at this point

blackcatg

Hi

Thanks for the input so far.

My policy pays out until the mortgage is paid or I have a miraculous recovery. Just got reply from them today that I can move mortgage & just update them with the details, they only pay up to original policy amount though of course.

Next question, why didn't they just pay off the mortgage on this or my other critical illness wouldn't it have saved them the interest? Is there any way of persuading them except to keep them up to date with my health & hope one of my problems is on their list? I have only recently got the Thyroid problem but will have to stay on meds for life.

HelpWhereIcan

Normally the conditions you have so far named would not be one of the defined critical illnesses that qualify for a lump sum payout. That would mean that you would have to claim under the total and permanent disability section of your critical illness policy to try for a payout.

The total and permanent disability section of your critical illness may require you to be unable to work in any capacity and your income protection may be on the basis of being able to carry out your own occupation or one for which you are suited by education, training or experience.

A subtle difference, but an important one.

Also note the phrasing 'total and permanent'

http://www.legalandgeneral.com/advisercentre/Protection/ViewDocuments/Files/Mortgage_Tech_Guide.pdf page 29

a - Activities Daily Living/Work Task definition

suffers through illness or accident, a mental or physical irreversible disability, which in the opinion of The Chief Medical Officer of Legal & General results in the life assured being permanently unable to perform, without the direct assistance of another person, three or more of the following functions:

b - Own Occupation

is by reason of sickness or accident, totally unable to follow his/her own occupation and in the opinion of Legal & General is likely to remain so permanently

This is one of the many reasons why I feel people who think Critical Illness and Income Protection (PHI) are interchangeable are very mistaken.

While you have not got the CI payment (possibly still could) you at least have the payment from your Income Protection which is enabling you to move house knowing the income will be there to make the repayments. An option you would not have had if you only had Critical Illness and one you definately would not have had if you'd had just life cover.

Depending on the progression of your illnesses, you could still qualify for a CI payment at some point in the future.

All in all it seems as if you received the right advice from your adviser. Whether you got the right plans or definitions will depend on the discussions you had at the time and which companies s/he had access to.

blackcatg

It was one of those Mortgage Broker places not sure if it's still in the town, I just told her we had to be really well covered as I was the only one able to work & we had to be able to pay the house if something happened to me. I have life policy as well. Belt & braces I suppose, just as well because I wasn't expecting to be too ill to work at 40 years old. Maybe other people should consider both if they can afford it. They pay my premiums for all 3 while i'm sick too. Actually wish we'd set the income one up for more now but we didn't think prices would have risen so much...
Thanks for all replies, hope I can repay the favour someday:T

BrokeRage

This is what our job is all about: appropriate insurances that are there when needed.

Hilariously, one of the brokers within my firm got rated "Red" (fail) on a case where he recommended L&G MPI for a client. Because you get a refund of the last years premium if you keep it throughout the term, it is considered to be an investment product and he is not authorised for investment advice.

I am sorry that you have health issues, though. I'd rathe you had your health than the cove, as I am sure you would too. Depression is just the icing on the cake, eh?

Rabiddog_2

Sorry to be so blunt BUT..maybe one reason why they wont pay off your mortgage is that they believe you may not be around to keep collecting the payments, if you get my drift....