# Cancelling mortgage protection insurance



## Joe1968 (6 Apr 2008)

I had to get mortgage protection insurance when I got my mortgage a few years back. I got the least expensive product I could find and got it separately from the Bank that gave me the mortgage. I think its called term insurance. Anway, I didn't want to get this insurance as i have no family but was told i had to get it. It is paid monthly from my account.

I resent spending money every month on this insurance that I don't need and a thought has crossed my mind: Can I simply cancel the direct debit paying my insurance?..surely this would lead to it being cancelled.

Will the bank find out since after all the insurance is separate to the bank? Will they or anybody else care?What is the worst case scenario if I do cancel the insurance? 

Thanks


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## Bgirl (6 Apr 2008)

The Bank will find out because it will have been assigned to them.  They will be notified by the provider as they are a beneficiary.


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## Marianne S (6 Apr 2008)

If you still have your mortgage in place then you do need to have this insurance. It doesn't have anything to do with having a family, basically it means that if you die during then term of your mortgage the insurance will pay off the mortgage so the bank won't be left with your debt. If you want to cancel it you will have to check with your bank first that it's ok. The cheapest form of mortgage protection is decreasing term insurance, it's the absolute minimum that everyone has to get when taking out a mortgage.


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## Joe1968 (7 Apr 2008)

Bgirl said:


> The Bank will find out because it will have been assigned to them. They will be notified by the provider as they are a beneficiary.


 
Actually, I don't think it was assigned. I think the bank didn't need it assigned. If it's the case that it wasn't assigned can i cancel it safely?


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## PM1234 (7 Apr 2008)

Joe1968 said:


> I had to get mortgage protection insurance when I got my mortgage a few years back. I got the least expensive product I could find and got it separately from the Bank that gave me the mortgage.



If you had to get it, it was a condition of the mortgage. If it was a condition of the mortgage, it is more than likely assigned to the lender. 

If you cancel the policy, the lender will be notified and will repeatedly send you letters advising that you need to put another policy in place.  After that its up to you to act.


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## Joe1968 (7 Apr 2008)

PM1234 said:


> If you had to get it, it was a condition of the mortgage. If it was a condition of the mortgage, it is more than likely assigned to the lender.
> 
> If you cancel the policy, the lender will be notified and will repeatedly send you letters advising that you need to put another policy in place. After that its up to you to act.


 
Ok thanks for the replies.

Let's assume (1) it was actually assigned to the Bank (2) that the Bank is notified of my cancelling the policy and (3) the Bank writes to me repeatedly seeking a new policy or asking me to start a new one up. If I ignore the correspondence will they give up or what is the most likey option that they will take? Remember that I haven't missed a payment.

On the other hand assume it either wasn't assigned to the Lender and hence they won't be notified...am I in any other legal difficulties (apart form the Bank) if I stop paying the mortgage protection insurance?


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## FredBloggs (7 Apr 2008)

I would say you're correct in thinking it was not assigned.  I had picked up various mortgage protection plans down through the years on my home and investment properties.  They were all required by the banks invoolved to get the mortgages but a couple of months ago when I  got a cheaper quote if I aggregated them I was surprised to find that all except one were never assigned and I was advised by the insurance brokers that if IO wrote to the bank which held the assignement on the one which was assigned they'd release it no problem and no questions asked.  The brokers told me banks do this all the time


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## bigchicken (8 Apr 2008)

A friend of mine was in a situation where the insurance company accidently cancelled the mortgage protection insurance. The bank were on the phone to him within hours about it. As far as i know, if it was a requirement of the loan and you cancel it then you are breaking the terms of the loan and the bank can demand full repayment immediately.


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## FredBloggs (8 Apr 2008)

bigchicken said:


> A friend of mine was in a situation where the insurance company accidently cancelled the mortgage protection insurance. The bank were on the phone to him within hours about it. As far as i know, if it was a requirement of the loan and you cancel it then you are breaking the terms of the loan and the bank can demand full repayment immediately.


 
but if its not assigned how do they find out?


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## ailbhe (8 Apr 2008)

Why don't you ring the insurance provider and ask them. Say you are thinking of changing mortgage provider and ask if you need to let them know. They will advise whether the policy is assigned or not. In the last 10 years (roughly) it has been a requirement by mortgage providers that you ahve life and home insurance in place before they will release the mortgage. It is usually a condition of  the mortgage terms that both these be kept in place for the term of the mortgage or the bank can request immediate repayment. Did you have to provide the documents in relation to the life policy to the bank before they released your mortgage? Did it ask anywhere on the proposal form who your mortgage provider was? Is a condition of your mortgage that you have life insurance? And if it is, is it really worth the risk of having your mortgage rebuked (which I assume would affect your ability to get a mortgage elsewhere as you would have to declare this)for the sake of a few euro a month?


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## FredBloggs (9 Apr 2008)

All my mortgages were taken out since 2001 - one (for my home as i moved) about 2-3 yrs ago.  I had always assumed they were assigned.
At the time I'd taken out my home loan it was loaded as the life co didn't like something in the health questionaire.  I had to go with them at the time in order to close the sale.  However it was aways my intention to revisit this as for the life of me i couldn't see why I had been loaded.  I had to of course mention that i had been loaded when reapplying to another life co and as a result they sent me for two medicals which wasa pian but at the end of it they didn't load me so naturally I wanted to switch.   When I got the brokers to look into this for me they found my original policy had never been assigned.  They said this wasn't unusual as often although its a condition on the loan its never followed up on when the documentation comes through. All the banks go on is the intial letter saying its put in place.  In fact the brokers told me that many people cancel their mortgage protection once they get the loan.   I realise for most people this would be a false economy and my own position is different from the ops in that all I was doing was changing life co - but if he has no dependants it really is a waste of money for him continuing with the mortgage protection - he would be better putting the money saved into some sort of income protection policy for himself


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