mortgage protection policy question

hello would be very grateful if anyone had a view - to settle a bet at the Golf Club, my friend says that if i did not pay the next premium on my mortgage protection policy which is one year old that it is none of the banks business if I choose not to pay approx 16000 over the next couple of decades, the mortgage is being paid like clockwork

Your friend is wrong, assuming that there was a loan offer condition requiring life assurance cover for the duration of the loan. If the mortgage is on your home and you're under 50, there would have been such a condition.

If you cancel your mortgage protection life assurance, you have broken the terms of your mortgage contract and that is certainly the bank's business.

Whether or not the bank chooses to do anything about it depends on the procedures of the bank in question.

If you don't pay your MPP premium, then the insurer will cancel the policy.

I suspect that the insusrer will inform the bank of this.

Protocol said:

If you don't pay your MPP premium, then the insurer will cancel the policy.

I suspect that the insusrer will inform the bank of this.

Click to expand...

Depends on the bank. More and more lenders are choosing not to take a legal asignment over life assurance policies, although the requirement for a policy still remains in the loan offer. If there's no assignment, the insurer won't write to anyone apart from the customer.

thank you for the views, I never was asked for bank details on application, but I did sign an assignment, do the bank write to insurer after I assign the policy...asking them to keep in touch, there was a lot of mayhem at my branch of a busy mortgage specialist bank, just getting the loan, and I would be surprised if they remembered to.....

If you signed an assignment, then the bank should have written to the life assurance company notifying them of the assignment. In turn, the life assurance company should keep the bank informed of what's happening with the policy. If you cancel the policy, the bank should get a letter and the bank should then contact you to remind you that you promised to keep the policy in force. If they really wanted to, the bank could demand immediate full repayment of your loan for breach of the terms of your loan offer. But I've never seen that happen.

Note my repeated use of the word "should" above. What actually does happen isn't always the same thing.