Mortgage Protection Policy cancelled but I received no notification

RainyDay

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[Moved from another thread - Moderator]
Ironically, I've just discovered that around the time that I was commenting on this thread, my life insurer was lapsing my own 19 year old mortgage protection policy. They are also looking for a revised medical history from me, presumably as an opportunity to raise the fee. This policy has been paid for 19 years by direct debit from my Danske Bank account.

For some strange reason, Danske seem to have bounced my Feb 2014 payment for this policy. I've checked the statement and confirmed that I had adequate funds at the time, so I've no idea why it bounched. I guess it was something to do with the Danske closure, but my account didn't shut down until April.

I switched my current account over to PTSB in April, and I noticed the life insurer listed as one of the direct debits on the switching form, so I assumed all was in order. When I noticed that there was no payment in May, I contacted the insurer over the weekend.

I was rather shocked to be informed by them that they lapsed the policy in March. They sent me a copy of the lapse letter which was of course sent to my previous address. It seems to have come as a bit of a surprise to my insurer that people often change address after taking out a mortgage protection policy.

I've gone back to the insurer to ask for more details on any other communications they made to me, to Danske (who hold to mortgage which the policy is assigned to) or to PTSB about the switchover, so I'll see what comes back there. But I am mightily annoyed that they seem to have lapsed a 19 year old policy with a single letter to an address that is almost certain to be outdated.
 
Hi Rainyday

Was it a reducing balance policy? Is there still a substantial balance on the mortgage?

If you paid a level premium on a reducing balance mortgage, you might get a cheaper quote elsewhere.

They sent me a copy of the lapse letter which was of course sent to my previous address. It seems to have come as a bit of a surprise to my insurer that people often change address after taking out a mortgage protection policy.

An interesting point. Would they have known that it was for your "new" house? You probably should have notified them that you had changed address.

You would have a right to complain to Danske as well for bouncing the payment.

The life company should have presented it a few times before writing to you.

Brendan
 
Was it a reducing balance policy?
Yes
Is there still a substantial balance on the mortgage?
No
If you paid a level premium on a reducing balance mortgage, you might get a cheaper quote elsewhere.
Maybe, though I'm concerned that we've both had health issues over the 19 years (hasn't everybody?) and that may bump up the price considerably.

An interesting point. Would they have known that it was for your "new" house? You probably should have notified them that you had changed address.
Yes, I probably should have notified them. But given that it was a mortgage protection policy, assigned to bank, wasn't it fairly obvious or extremely likely that there was going to be a change of address involved? Mortgage protection policies wouldn't generally be used for investment properties, would they? If they had written in the months after the policy took effect, then post would have been forwarded. But when they write to the old address 19 years later, post doesn't get forwarded.

You would have a right to complain to Danske as well for bouncing the payment.
Yes, I've asked them tonight what happened too. Funnily enough, they also bounced a direct debit for An Post tv licence last November, for reasons that were never quite explained, which has left me with a bit of an admin mess to sort out.

The life company should have presented it a few times before writing to you.
Yes, I'm amazed at the speed at which they operated. I'm pretty sure the DD normally hits around 20th of the month, and the lapse letter is dated 10th March, so less than a month all in.
 
Hi Rainyday

If it's a reducing balance policy and there isn't a substantial balance left on the mortgage, it may not be worth renewing.

So first of all, compare the level of cover to the amount of premium. You might be better off paying the "premium" against the balance on the mortgage.

Brendan
 
May not be worth renewing but the point remains that there should be a robust process for the insurance company to contact the customer before lapsing a policy with just one letter out to a 19 year old address. If they were obliged by the regulator to send out at least annual statements showing premiums paid that would maintain some level of communication and up-to-date details with both parties and I imagine would greatly reduce these kind of problems
 
May not be worth renewing but the point remains that there should be a robust process for the insurance company to contact the customer before lapsing a policy with just one letter out to a 19 year old address. If they were obliged by the regulator to send out at least annual statements showing premiums paid that would maintain some level of communication and up-to-date details with both parties and I imagine would greatly reduce these kind of problems

Agree fully.

I wonder if there are any specific guidelines in the Consumer Protection Code?
 
They sent me a copy of the lapse letter which was of course sent to my previous address. It seems to have come as a bit of a surprise to my insurer that people often change address after taking out a mortgage protection policy.

Just thinking about this. If they had sent a lapse letter to your new address, you might raise issues about Data Protection. What if you did not live there, and a tenant opened the letter?

I suppose that they could write a letter along the lines of "Please get in touch with us." without saying what the actual business was.
 
Agree fully.

I wonder if there are any specific guidelines in the Consumer Protection Code?
There are no specific rules in the Consumer Protection Code 2012 to cover this type of issue.

It remains the Consumers issue to ensure payment.

As a view;
I read the Code more as a Consumer Protection at point of sale , after that it is consumers responsibility.
 
Hi Rainyday

If it's a reducing balance policy and there isn't a substantial balance left on the mortgage, it may not be worth renewing.

So first of all, compare the level of cover to the amount of premium. You might be better off paying the "premium" against the balance on the mortgage.

Brendan

Given Danske's role in the debacle, and given that they are the prime beneficiary of the policy, and given the short time span of the mortgage, I'm sorely tempted to say to hell with them all. I'll have the mortgage cleared before Danske/Pepper notice and take any effective action.

May not be worth renewing but the point remains that there should be a robust process for the insurance company to contact the customer before lapsing a policy with just one letter out to a 19 year old address. If they were obliged by the regulator to send out at least annual statements showing premiums paid that would maintain some level of communication and up-to-date details with both parties and I imagine would greatly reduce these kind of problems

Indeed, some regular contact would be helpful, but more particularly, some contact in the month or two after the new policy/mortgage was taken out would have avoid the problem entirely in this case.

Agree fully.

I wonder if there are any specific guidelines in the Consumer Protection Code?
Interesting - would be very interested in hearing more.
Just thinking about this. If they had sent a lapse letter to your new address, you might raise issues about Data Protection. What if you did not live there, and a tenant opened the letter?

I suppose that they could write a letter along the lines of "Please get in touch with us." without saying what the actual business was.

Yes, they could have sent a 'get in touch' letter, or they could have sent a 'have you moved' letter to the old address in the month or two after the mortgage, or they could have sent a note to Danske, either to tell them that the assigned policy was lapsed, or just a 'get in touch' letter for me, or they could have sent a 'get in touch' letter via PTSB.

But it seems they did little or nothing.
 
If someone changes his/her address it is simply common sense to notify bank/insurer/whoever of such a change. How else are they going to know?

I didn't elect for annual DD payment of my mortgage protection insurance when I commenced 8 years ago. I get a letter every year looking for payment and I either paid by cheque or now use my debit/credit card over the phone. This suits me, I know the renewal date anyway without the prompt and I get a receipt in the post.
 
Just thinking about this. If they had sent a lapse letter to your new address, you might raise issues about Data Protection. What if you did not live there, and a tenant opened the letter?

You might just as easily say, what if you did not live in the old house anymore and a tenant opened the letter. Any data protection issues in that case are with the person who opened the letter, surely?

I was always taught as child that post should be opened by the person it's addressed to and although, for example, my mum might open a letter for my dad, generally, if it's not addressed to you, you don't open it. And, more importantly, that post must be returned to sender if the person is not available. I was horrified to move into a house once and find that the landlord just dumped any post that arrived for people who had moved (even those who had just moved out a week before) into the bin. Having recently spent time catching up with all those companies that I lost contact with over the years and several moves (eircom/Vodafone, pension stuff and so on) I've heard more than once that letters were sent to me and not returned so this landlord obviously isn't the only one. I used to complain about the German way of doing things but I've come to appreciate it - letters are only delivered if your name is on the postbox/door. And if you're renting, landlords are pretty quick to remove your name as soon as you've moved out.
 
Given Danske's role in the debacle, and given that they are the prime beneficiary of the policy, and given the short time span of the mortgage, I'm sorely tempted to say to hell with them all. I'll have the mortgage cleared before Danske/Pepper notice and take any effective action.
You or your wife would be the prime beneficiaries, not Danske.

If you die with the policy in force, the policy will clear the mortgage, so your wife will be mortgage free.

If you die without a policy, your wife will still owe what is left on the mortgage. As you must be in huge positive equity, Danske will not lose out.

I presume it's a cheap tracker and so Danske would benefit a bit from it being paid off early, but you are the prime beneficiary.

As I said, you may well be better off and Danske would be better off if you paid the premiums off the mortgage. It's unlikely that Danske will chase you to reinstate the policy. You would have a great case for refusing to do so.
 
You might just as easily say, what if you did not live in the old house anymore and a tenant opened the letter. Any data protection issues in that case are with the person who opened the letter, surely?

I take your point, but if they write to the address on file, there can be no complaint from the customer.

If they write to an address the customer didn't give them, the customer could well complain. I agree that the main complaint should be against the person opening the letter, but the insurance company could well be criticised for this as well.
 
Life companies usually give 30 days grace for non payment of premiums. After that, they look for a declaration of health before going back on cover and usually for all the arrears to be paid.

Ask the insurance company how much correspondence they sent you. In my experience, they send a letter when the premium bounces, a warning letter that the policy will lapse and then another that the plan has lapsed. I know you are frustrated, but it is your responsibility to tell the insurance company that you moved home, it is not there's to ask all their customers if they are still living at the address that they gave.

My gripe would be with Danske bank for bouncing the direct debit and I would fight it on those grounds. Is there even anyone to talk to Danske bank these days? I'd also have a go at PTSB. If the DDM transferred across, why wasn't it paid?


Steven
www.bluewaterfp.ie
 
If someone changes his/her address it is simply common sense to notify bank/insurer/whoever of such a change. How else are they going to know?
I know you are frustrated, but it is your responsibility to tell the insurance company that you moved home, it is not there's to ask all their customers if they are still living at the address that they gave.
Yes, it is my responsibility, but here's the thing - if the insurance company is selling a product that inherently involves changing address, do you think that there is a particular professional responsibility on them to manage that process? It shouldn't be a surprise to an insurance company to know that someone moves house shortly after buying this product. It shouldn't come as a surprise that moving house is a fairly disruptive event, and the consumer might forget.

So perhaps the insurance company should have taken steps at the time of the move - a follow up letter to the old address would have been forwarded at the time, or a simple phone call after a month or two would have avoided a whole pile of drama.

I was always taught as child that post should be opened by the person it's addressed to and although, for example, my mum might open a letter for my dad, generally, if it's not addressed to you, you don't open it. And, more importantly, that post must be returned to sender if the person is not available.
They are now telling me that, as no post was returned to them, they had no way of knowing that I had moved - a very flawed assumption. At a minimum, they should have sent one of the letters by registered post, to verify that the person still lived at the address in question.

You or your wife would be the prime beneficiaries, not Danske.

If you die with the policy in force, the policy will clear the mortgage, so your wife will be mortgage free.

If you die without a policy, your wife will still owe what is left on the mortgage. As you must be in huge negative equity, Danske will not lose out.
Thanks for the clarification - I presume you meant to say positive equity, not negative.
Life companies usually give 30 days grace for non payment of premiums. After that, they look for a declaration of health before going back on cover and usually for all the arrears to be paid.

Ask the insurance company how much correspondence they sent you. In my experience, they send a letter when the premium bounces, a warning letter that the policy will lapse and then another that the plan has lapsed.
Thanks for the clarification. They have now confirmed that they did send three letters, all to the 19 year old address, the address that was given BEFORE the mortgage product was taken out. They have also told me that they notified my broker. I've never heard of this broker and certainly never dealt with them. I can only assume that they had some agency for NIB at the time. Presumably, the broker didn't bother notifying Danske now.

My gripe would be with Danske bank for bouncing the direct debit and I would fight it on those grounds. Is there even anyone to talk to Danske bank these days? I'd also have a go at PTSB. If the DDM transferred across, why wasn't it paid?
Yes, I have a gripe with Danske all right, so I'll see what they say. I don't think PTSB share any blame, as the insurer never presented to PTSB for payment, as the policy had lapsed by then.
 
Had it anything to do with SEPA being introduced which caused a lot of D/D payments to get missed. Our cas insurenace was missed due to this but the bank sorted it out for us.
 
I've come across cases like this before and have a few points to add: -

  • An insurance company will not change the correspondence address on your record. For all they know, you could have been taking out the policy to cover an investment property mortgage.
  • It is the customer's responsibility to pay their premium when due in order to ensure cover is continued. Reminders are sent as a courtesy, but they do not change the contractual obligation on the customer to pay the premium on time. In other words, reminders of late premiums are entirely optional.

I'm just posting these because there's a misconception that if a life insurance company doesn't give you adequate warning, they can't take you off cover. Warnings and reminders are discretionary and are not part of the contract. If you decide to go down the formal complaint route, I suspect that this will be what the reply will be.

That said, I do agree that in 2014, it wouldn't be terribly difficult for Caledonian Life to have a more robust system for dealing with premium collections. How difficult would it be to incorporate a question on an application form "Do you want us to change the address after the policy issues?" and a follow-up procedure thereafter? How difficult would it be to gather e-mail addresses or mobile phone numbers as an alternative or supplementary method of issuing reminders?
 
The reason why life companies will seek evidence of health after a policy has gone off risk is to protect themselves from the following scenario: Joe Bloggs has a life insurance policy; he voluntarily cancels it to save a few bob; a year later he gets bad news from a doctor - he's diagnosed with a terminal illness; he goes back to the insurance company and asks if he can revive his old policy that he had cancelled previously.
 
A few other points: -

  • A copy of late payment notices and lapse warnings will usually be sent to the broker/agent. In this instance, was the agent for the policy Danske themselves?
  • I think you would have a valid complaint against Danske for bouncing the Direct Debit with no valid reason.
 
Yes, it is my responsibility, but here's the thing - if the insurance company is selling a product that inherently involves changing address, do you think that there is a particular professional responsibility on them to manage that process? It shouldn't be a surprise to an insurance company to know that someone moves house shortly after buying this product. It shouldn't come as a surprise that moving house is a fairly disruptive event, and the consumer might forget.

As Liam said, it could have been for an investment property or changing your current cover. Plenty of people take out mortgage protection as their primary life cover plan.

With thousands of customers, it would be too expensive for an insurance company to proactively ensure that the client addresses are up to date.

I can't see how you have a case against the insurer in this case. It's the banks fault. See if the insurer will put you back on cover if the bank admit fault to cancelling your DDM without permission. Then go after the bank regardless.


Steven
www.bluewaterfp.ie
 
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