Mortgage Protection Insurance

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janeio

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I was wondering if anybody could guide me in this. I am in the middle of an acrimonious separation. The Mortgage Protection Insurance, which is joint life, is paid by Direct Debit from my account. The premium if very high at E167.75. I cannot afford to continue paying this amount every month by myself.

Can I get a single life policy written to cover my liability, as I understand it is a legal requirement to hold a M.P.P. and let my estranged spouse look after his own liability.

I have endeavoured to get a new joint life policy written with reduced cover but my spouse will not respond.
 
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Does your spouse contribute to the mortgage? If/when you get a legal agreement in place, will he be required to contribute to the mortgage?
 
No. He has moved out of the family home. He is not contributing to the mortgage or the mortgage protection policy.
 
I think him contributing to the mortgage is not even going to be on the table. He has considerable debts, incurred through gambling. I am managing to pay quite a considerable amount of the mortgage, E1,586 through Carers Allowance, Lone Parents and Mortgage Interest Supplement. Like a large proportion of people my mortgage has just increased by E100 approx per month due to the Mortgage Interest Relief being taken away. Bringing it up to E1686, plus the mortgage Protection policy of E167.75. I have two children, one of whom has special needs so I am not in a position to work outside of the home. He currently pays maintenance for the children but there is a maintenance hearing in a few months time and he is looking to reduce the amount that he is paying.
 
Hi janeio,

This must be difficult for you.

If he's not contributing to the mortgage, then being blunt, if he was dead you wouldn't be any worse off, as you'd still have to pay the mortgage as you are now. On the other hand, if he died at the moment, the policy would clear off the mortgage for you.

If your lender didn't take an assignment over the life assurance policy, then you can cancel it at any time. Although strictly speaking you need both signatures to cancel a policy, if you simply cancel the Direct Debit, the policy will lapse anyway. You could replace it with a policy on your own life. (Make sure cover is in place on yourself before cancelling the other one.) I'd suggest you then write to the lender and explain to them what you've done and write to your husband advising him what you've done and advising him to take out and pay for his own cover if he wants it. If the lender wants cover on your husband, they can pursue him to take it out.

This is a possible solution off the top of my head. You should run it by your solicitor before acting on it - I'm not a solicitor.
 
Can you please explain what you mean by "your Lender taking assignment over your policy"
 
Janeio, Can you go back to the person you took the policy out with to ask why it is costing you so much? E167.75 a month is pretty high. Was the premium loaded (ie increased) due to ill health or something?
 
janeio said:
Can you please explain what you mean by "your Lender taking assignment over your policy"
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It means in the event of anything happening to you that the lender has first rights to the benefits payable under the policy to clear the outstanding loan.

This is standard practice by lenders on loans relating to your own residence.

The assignment means that they have an interest in the policy though and so will not allow you to cancel the policy until another policy has been put in place.

As Liam pointed out however, it may just be quicker to cancel the direct debit. The life assurance company will soon cancel the policy if they are not being paid.
 
Sumatra said:
Janeio, Can you go back to the person you took the policy out with to ask why it is costing you so much? E167.75 a month is pretty high. Was the premium loaded (ie increased) due to ill health or something?
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Your right the premium does look very high. There could be reasons for it though other than loadings.

- Age
- Smoker status
- High sum assured
- Type of policy

Sumatra is right though, it may be worth getting a second opinion on the cover and cost you currently have to make sure you were not sold an overly expensive policy.
 
The policy was originally loaded for health reasons (mine). I have obtained an alternative quote in my name, but insurers will not include critical illness cover for me.

Thanks for clarifying my query on "Lender taking Assignment"
 
Your welcome Janeio.

In relation to the critical illness part of policy, this is not a legal requirement for your lender. Only death benefit is legally required.

Ditching the critical illness part of the policy is also the quickest way to reduce the premium as critical illness cover is relatively expensive compared to just straight life cover. This would definately save you a few quid if you are happy to lose the critical illness cover.
 
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