Other Single person with no mortgage protection insurance.
- Thread starter Molli
- Start date
Life cover is a condition of most mortgages except in certain circumstances, that said more and more people are letting it lapse these days due to lack of money, there is nothing much the bank can do about this.
Parents are not liable for the debt, normally house would be sold to clear mortgage, if not enough and no other assets then nothing much can be done.
Parents are not liable for the debt, normally house would be sold to clear mortgage, if not enough and no other assets then nothing much can be done.
wbbs. I'd like to challenge your statement that "more and more people are letting it lapse these days due to lack of money, there is nothing much the bank can do about this". What evidence do you have that this is happening and what evidence do you have that the banks are doing nothing about it?
I have filled plenty of SFS forms where there is no life or house insurance in place any longer.
What can the bank do? If the customer has insufficient to live on they can't make them pay for insurance. Remember a lot of banks did not even assign the life policy so they don't even know it has lapsed. On the house insurance they will write out to customer telling them they are in breach of their t&cs but realistically nothing they can do here either, they are hardly going to call in the loans.
What can the bank do? If the customer has insufficient to live on they can't make them pay for insurance. Remember a lot of banks did not even assign the life policy so they don't even know it has lapsed. On the house insurance they will write out to customer telling them they are in breach of their t&cs but realistically nothing they can do here either, they are hardly going to call in the loans.
You could do that with a house insurance in theory and with some banks the house insurance payment was part of the mtg repayment so the bank kept debiting it from the mtg balance each month, I don't think that happens anymore. Some banks used to take out a buildings only cover and debit it to the mtg if advised by insurance company that house insurance had lapsed, again a practice that I believe was discontinued some time ago.
With regards to life cover you couldn't take out a policy on behalf of a customer if an existing one had lapsed, again if the payments were part of the mtg repayment then they could be kept up by debiting the mortgage but an unlikely event these days.
If memory serves me correctly the composite repayment including insurances was outlawed some time back in the interests of clarity and correct comparison with the pricing of products.
With regards to life cover you couldn't take out a policy on behalf of a customer if an existing one had lapsed, again if the payments were part of the mtg repayment then they could be kept up by debiting the mortgage but an unlikely event these days.
If memory serves me correctly the composite repayment including insurances was outlawed some time back in the interests of clarity and correct comparison with the pricing of products.
They never had to have an assignment, some assigned some did not, they simply had to ensure there was cover in place when the mortgage was drawn down.
Yes recent forms and furthermore I know several people still in the banks filling these forms and elsewhere who tell me more and more people are dropping their insurances.
What can the bank do? If there is no policy in force and no money to pay for one what would you suggest they do? It's not a case of turning a blind eye, there is no solution, food on the table or life cover in place!
I have also filled these forms from a bank point of view, not in very recent past few years ago, if someone had let their insurances lapse you would point out the dangers blah blah blah, you would suggest an appointment with the banks insurance guy to flog them new policies (if you were sales minded, I never was, far more likely to tell them shop around!).
Yes recent forms and furthermore I know several people still in the banks filling these forms and elsewhere who tell me more and more people are dropping their insurances.
What can the bank do? If there is no policy in force and no money to pay for one what would you suggest they do? It's not a case of turning a blind eye, there is no solution, food on the table or life cover in place!
I have also filled these forms from a bank point of view, not in very recent past few years ago, if someone had let their insurances lapse you would point out the dangers blah blah blah, you would suggest an appointment with the banks insurance guy to flog them new policies (if you were sales minded, I never was, far more likely to tell them shop around!).
If you are talking about years ago then this has been well publicised and efforts have been made by lending institutions to correct these small details that were overlooked due to the distraction of bigger fish with more ferocious appetites.
"They simply had to ensure there was cover in place when the mortgage was drawn down." Yes but in the T&C they must take out cover but also they must maintain cover.
It is up to the borrower to comply with the agreement they signed which basically states it is up to the applicant to effect and assign a policy acceptable to the lender and that suitable cover must be maintained for the duration of the loan. That is pretty simple, the onus is on the borrower not the bank and I'm sure most would be aware of their obligations and risks.
If the lender encourages the practice you said was going on then you should report such misconduct.
If it happens then will the lender agree to such a change to the T&C and give same in writing so as to protect the legal standing of the borrow should things go pear shaped.
I'm sure that in the vast majority of cases what you are seeing is borrowers modifying their mortgages, extending their term etc to ensure they have sustainable financing and this modification results in and an element of people replacing their cover with more cost effective or suitable cover which reflects their changed circumstances.
"They simply had to ensure there was cover in place when the mortgage was drawn down." Yes but in the T&C they must take out cover but also they must maintain cover.
It is up to the borrower to comply with the agreement they signed which basically states it is up to the applicant to effect and assign a policy acceptable to the lender and that suitable cover must be maintained for the duration of the loan. That is pretty simple, the onus is on the borrower not the bank and I'm sure most would be aware of their obligations and risks.
If the lender encourages the practice you said was going on then you should report such misconduct.
If it happens then will the lender agree to such a change to the T&C and give same in writing so as to protect the legal standing of the borrow should things go pear shaped.
I'm sure that in the vast majority of cases what you are seeing is borrowers modifying their mortgages, extending their term etc to ensure they have sustainable financing and this modification results in and an element of people replacing their cover with more cost effective or suitable cover which reflects their changed circumstances.
I am sorry but I have to contradict some of the posters here. A policy may lapse and some time may pass before the bank reacts (the insurance company may to slow to inform the bank, the bank may be slow to follow up) sometimes the follow up can take up to 2 years but eventually most banks will follow up if a policy was assigned to them.
To say that the bank can do nothing is also untrue depending on the circumstances, I have a customer who let their cover lapse because they couldnt afford it and the bank advised the customer that they were in breach of their mortgage agreement (and the Consumer Credit Act 1995) and unless a new policy was put in force immediately the bank would seek to remove the client from their very low tracker rate and put them on a variable rate mortgage. I am not condoning this type of strong arm tactics by the bank but I do think its something people should be aware of.
To add further clarification you are only obliged to have mortgage protection cover on your principle place of residence, it is not a legal requirement on investment properties. However, in recent years I have seen many customers who never had mortgage protection on their investment properties take out mortgage protection on investment properties because of their fear that due to negative equity the value of the property wouldnt pay the outstanding debt. This wont affect single lives but it would affect joint life mortgages.
To say that the bank can do nothing is also untrue depending on the circumstances, I have a customer who let their cover lapse because they couldnt afford it and the bank advised the customer that they were in breach of their mortgage agreement (and the Consumer Credit Act 1995) and unless a new policy was put in force immediately the bank would seek to remove the client from their very low tracker rate and put them on a variable rate mortgage. I am not condoning this type of strong arm tactics by the bank but I do think its something people should be aware of.
To add further clarification you are only obliged to have mortgage protection cover on your principle place of residence, it is not a legal requirement on investment properties. However, in recent years I have seen many customers who never had mortgage protection on their investment properties take out mortgage protection on investment properties because of their fear that due to negative equity the value of the property wouldnt pay the outstanding debt. This wont affect single lives but it would affect joint life mortgages.
As you say 'if a policy was assigned', not all banks assigned the policy.
I don't what we are having a discussion about here? This has nothing to do with the OP's query. It is a simple fact that many people with mortgage difficulties have let their insurances lapse, ask anyone working with these people.
Sumatra, what misconduct are you talking about that should be reported?
And just to clarify only yesterday I helped someone fill an SFS and they have no life or house insurance in place, both long lapsed so this is not years ago we are talking about. I also fail to see what that bank is realistically going to able to do about it. Yes it is the part of the t&c, yes it is the borrowers responsibility to maintain cover, borrower has €188 p.w. to live on in rural Ireland, car essential (14yrs old so no downsizing possible), there are no funds to pay.
I am tired of this discussion, anyone would think I was encouraging people to let their insurances lapse, as a matter of fact it is an awful situation with possible dreadful consequences, I have dealt with case where life policy had lapsed and unfortunately customer got cancer and died, wife left with children and mortgage, it happens. Until people have money in their pockets to pay their bills it will continue to happen.
I don't what we are having a discussion about here? This has nothing to do with the OP's query. It is a simple fact that many people with mortgage difficulties have let their insurances lapse, ask anyone working with these people.
Sumatra, what misconduct are you talking about that should be reported?
And just to clarify only yesterday I helped someone fill an SFS and they have no life or house insurance in place, both long lapsed so this is not years ago we are talking about. I also fail to see what that bank is realistically going to able to do about it. Yes it is the part of the t&c, yes it is the borrowers responsibility to maintain cover, borrower has €188 p.w. to live on in rural Ireland, car essential (14yrs old so no downsizing possible), there are no funds to pay.
I am tired of this discussion, anyone would think I was encouraging people to let their insurances lapse, as a matter of fact it is an awful situation with possible dreadful consequences, I have dealt with case where life policy had lapsed and unfortunately customer got cancer and died, wife left with children and mortgage, it happens. Until people have money in their pockets to pay their bills it will continue to happen.
wbbs in post #3 in reply to OP's query you made an exaggerated statement and when challenged you have not been able to support the claim. No worries that is fine by me, lets move on.
The case you dealt with where a customer broke the t&c of the loan agreement by not maintaining life cover on the mortgage leaving a wife, children and a loan. What was the outcome? What did the bank do for this family?
The case you dealt with where a customer broke the t&c of the loan agreement by not maintaining life cover on the mortgage leaving a wife, children and a loan. What was the outcome? What did the bank do for this family?
I had to go back and read #3 to see what I said! I said lots of people are letting their insurances lapse, I cannot support this short of giving you names, ask anyone working in MABS and filling out SFSs and they can tell you this, ask bank officials if they are coming across this, I still don't know what misconduct you refer to?
Bank did nothing special for the customer, she got the normal interest only/moratorium initially as needed but as soon as she got a job she was expected to pay her mortgage like everyone else.
Bank did nothing special for the customer, she got the normal interest only/moratorium initially as needed but as soon as she got a job she was expected to pay her mortgage like everyone else.
So you based your assumption on a small sample of cases known to you and you represented it here as a statement of fact?
You appear to justify non payment of premiums because of lack of money and that more and more people were doing it. That coupled with the statement 'there is no solution' and 'the bank could do nothing about it' is a generalisation which may mislead other readers.
Can you please tell any of the possible implications for the consumer who breaks the terms and conditions of the loan agreement they signed up to? Are you still sure the bank can do nothing about it?
On the other point you asked me about, if you felt employees of the lender encouraged people to be in breach of contract then that would be misconduct.
You appear to justify non payment of premiums because of lack of money and that more and more people were doing it. That coupled with the statement 'there is no solution' and 'the bank could do nothing about it' is a generalisation which may mislead other readers.
Can you please tell any of the possible implications for the consumer who breaks the terms and conditions of the loan agreement they signed up to? Are you still sure the bank can do nothing about it?
On the other point you asked me about, if you felt employees of the lender encouraged people to be in breach of contract then that would be misconduct.
You are correct on this and only recently I had a bank try and sell me insurance for an investment even though we don't need it. They went on the angle of what if you or Mr.Bronte dies in the next 10 years
It would make no difference as the investment pays for itself etc.For homes it's a different matter, especially where there is a spouse and children. There was a tragic case of a suicide on Joe Duffy a couple of weeks ago and the widow was left with no cover as the husband had stopped it to save money.
If people want to save money on their life insurance, they should switch from expensive products to 'term' insurance, which is the cheapest type.
Ok this is my last post on this, I have just seen your reply now Sumatra. I was certainly not justifying in any way non payment of insurance and was not saying people were doing it deliberately. I come across it regularly enough where it has happened due to people not having the money to pay their bills, simple as that. My comment initially was to try and reassure the OP that the problem they were talking about happens to other people too and was not a one off that the bank would never have come across before.
I did not mean the bank could do nothing about it so off you go and don't pay your insurances!. I meant what realistically are the bank going to do to a customer who has let their insurances lapse due to lack of income, it's part of the general debt and unemployment problem facing people. I have not come across anyone being taken off a tracker or being threatened with it due to this, although some posters have said that is happening. I don't know what the implications are for the customer from the bank's point of view, I haven't seen anything done to a customer, from the customers point of view the implications are that they die or the house burns down when they have no insurances. I worked in banking for many years and letters came in every week from insurance companies advising us of lapsed policies, customers were sent letters telling them, letter were followed up with phone calls but if the customer did not provide a new policy I never saw a case of where anything further was done, this is NOT to say I am advocating it as a course of action merely stating what was practice.
I never said employees of the lender encourage not paying insurances, why on earth would they! I said if it became apparent while filling in SFS forms with customers that their insurances had lapsed due to non payment then you would obviously tell them of the risks for them and advise them to take out the insurance again. Bearing in mind that the reason they are sitting in front of you is they cannot afford their mortgage payments then the chances of them finding money for new insurance policies is slim too.
Just to reiterate I have never encouraged anyone not to pay their insurances, which are pretty essential products, I have tons of insurance myself but then again I can afford it, not everyone is as lucky.
I did not mean the bank could do nothing about it so off you go and don't pay your insurances!. I meant what realistically are the bank going to do to a customer who has let their insurances lapse due to lack of income, it's part of the general debt and unemployment problem facing people. I have not come across anyone being taken off a tracker or being threatened with it due to this, although some posters have said that is happening. I don't know what the implications are for the customer from the bank's point of view, I haven't seen anything done to a customer, from the customers point of view the implications are that they die or the house burns down when they have no insurances. I worked in banking for many years and letters came in every week from insurance companies advising us of lapsed policies, customers were sent letters telling them, letter were followed up with phone calls but if the customer did not provide a new policy I never saw a case of where anything further was done, this is NOT to say I am advocating it as a course of action merely stating what was practice.
I never said employees of the lender encourage not paying insurances, why on earth would they! I said if it became apparent while filling in SFS forms with customers that their insurances had lapsed due to non payment then you would obviously tell them of the risks for them and advise them to take out the insurance again. Bearing in mind that the reason they are sitting in front of you is they cannot afford their mortgage payments then the chances of them finding money for new insurance policies is slim too.
Just to reiterate I have never encouraged anyone not to pay their insurances, which are pretty essential products, I have tons of insurance myself but then again I can afford it, not everyone is as lucky.