Mortgage protection policy - reassignment

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DannyBoyD

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Mortgage protection policy is assigned to Bank A; mortgage was redeemed some years ago, but policy still in place & premiums paid.

Q1: if policy holder dies, does the policy still pay out the sum assured as of date of death?

Q2: can the policy be reassigned to Bank B if policy holder takes out another mortgage?

Q3: if the sum assured is higher than the mortgage to which it applies, is the excess paid out?

thanks all
 
I would think it depends on the small print but ultimately mortgage protection is just a life policy that acknowledges a mortgage providers role.
So if no mortgage provider then it should pay out all to policyholders estate.

Can it be resigned to another property? Again assuming there isn't a a clause that limits it to one address then perhaps. I've resigned my mortgage protection to a different lender but the property stayed the same. I must dig out my policy and see if tan address is specified.

You would want a new mortgage amount and term that was fully covered by the existing policy which might be a limiting factor.

Payout would be the sum insured (or the amortised value dependent on policy wording). If this was greater than the mortgage the balance goes to the estate.
 
In our case it was a yes for Q2

We had a break of 2 years between mortgages, kept paying the original policy.
When drawing down new mortgage, financial advisor looked at the existing policy, added a 2nd one to cover the additional balance.
In our case worth keeping as original policy premium was low.
 
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