Assigning an existing life policy to a bank instead of taking a new mortgage life policy

sceach

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A couple of months back I posted this in the mortgages section but didn’t get any responses so maybe this section is more appropriate.

Separate to my current mortgage life insurance policy I also have a term assurance plan.
I will soon be taking out a second mortgage.
Is it possible to assign an interest in my term assurance policy to the bank instead of taking out a third life policy?
The remaining term on the existing term plan is longer than the new mortgage term and the sum assured is five times the loan amount.
Thanks.
 
If your second mortgage requires a form of life assurance (or if it doesn't and you just prefer having it covered) then yes you can use it (a single life policy won't cover a joint mortgage). In the event of a claim the bank will have first call on the proceeds of the policy and any remainder will go to your estate. Consider if the remainder will still serve the original purpose you took the term assurance policy out for.
 
Even if it is not acceptable, don't just cancel it. As you get older policies become more expensive and harder to get. It can be a handy thing to have.
 
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