2 Mortgage protection policies on 1 property

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PyritePete

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Hi all, Hope I have posted this is in the right place. Apologies its a little long-winded...

I have just found out that we have 2 Mortgage Protection Policies both with Serious Illness Cover on our house & both assigned to the same financial institution.

A bit of background - the purchase of our 1st home & MPP/SIC policy was arranged by a broker. We borrowed some money to extend this house but decided against it, sold up and moved to a new house 1 year later. ( Not the best idea...given my username !!!!!!! )

On purchasing our 2nd home, thru the same broker and financial institution we then took a MPP/SIC policy (thinking that the other one was cancelled/superceded). I dont understand how this could have happened.

We then took out a consolidation loan/2nd mortgage some 2 years ago and were forced to take out a life cover policy to accompany the consolidation loan, again with the same financial institution, underwritten by a different company to the MPP's

While restucturing this consolidation loan, we are being pushed to revise our life cover policy. THis has only now just alerted me and I started checking out matters.

My questions are

1) is having 2 MPP/SIC policies on one property legal ?
2) is there any drawbacks to having 2 MPP on one property ?
3) have we any recourse to our mortgage lender, with them knowing our situation ?
4) should we cancel one of the MPP's ?
5) are we entitled to any reimbursement ?

I think we have been naive here, maybe too trusting of our broker at the time. Its only since our mortgage lender has been pushing us to revise our life cover that I discovered 2 different MPP documents at home.

Any advice or help would be greatly appreciated.

Many thanks,
Pete.
 
I'm slightly confused - do you have 3 policies in total 1) original house; 2) new house original loan; 3) new house new loan?

if it is only the second two you probably have two policies that each cover a portion of your borrowings - this is probably not the most efficient cover, one policy to cover all borrowing would prob be cheaper
 
Hi,

1. I don't think it's illegal to have more than one policy on a property, it's a policy on your life, not on your house
2. I don't think there's any drawbacks to having two policies, apart from paying extra premiums of course. If you keep all the policies, and then go for another life cover policy down the line for personal cover, then the life company might query why you have so much cover.. If there's a valid claim on your policies, and they are assigned to a mortgage provider, then the benefit will be payable to the mortgage provider to pay off your mortgage. If there's a surplus after this has been paid off, then the balance will be paid to you.
3. You probably won't have any recourse with your mortgage provider, it's up to you to cancel your policy, not them. They should have released the assignment on the older policies when you took out the new one but they would not have the power to cancel your policy.
4. You would need to speak to a financial adviser to see if you should cancel the extra policies, they will tell you exactly how much you should be covered for (mortgage and personal cover) and which policies you should cancel if you do need to cancel one.
5. No, you are not entitled to any reimbursement, if there had been a claim, the policies would have paid out, therefore you have benefitted from the service you paid for.
 
millieforbes said:
I'm slightly confused - do you have 3 policies in total 1) original house; 2) new house original loan; 3) new house new loan?

if it is only the second two you probably have two policies that each cover a portion of your borrowings - this is probably not the most efficient cover, one policy to cover all borrowing would prob be cheaper
Click to expand...

yes 3 policies in total
 
you may be due some refund on the mortgage protection part of the policy you were paying for the first mortgage
 
Betsygirl said:
Hi,

1. I don't think it's illegal to have more than one policy on a property, it's a policy on your life, not on your house
2. I don't think there's any drawbacks to having two policies, apart from paying extra premiums of course. If you keep all the policies, and then go for another life cover policy down the line for personal cover, then the life company might query why you have so much cover.. If there's a valid claim on your policies, and they are assigned to a mortgage provider, then the benefit will be payable to the mortgage provider to pay off your mortgage. If there's a surplus after this has been paid off, then the balance will be paid to you.
3. You probably won't have any recourse with your mortgage provider, it's up to you to cancel your policy, not them. They should have released the assignment on the older policies when you took out the new one but they would not have the power to cancel your policy.
4. You would need to speak to a financial adviser to see if you should cancel the extra policies, they will tell you exactly how much you should be covered for (mortgage and personal cover) and which policies you should cancel if you do need to cancel one.
5. No, you are not entitled to any reimbursement, if there had been a claim, the policies would have paid out, therefore you have benefitted from the service you paid for.
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thanks BetysGirl,

on 3), I just spoke with our mortgage lender and they tell me that the broker should have arranged all this. Can you just clarify for me what you mean here please ?

Thanks
 
It is ultimately up to the policy holder to cancel a policy, no one else can do it. You will get no refund unless you can prove you asked for policy to be cancelled as all policies would potentially have paid out in the event of a claim.

Life cover is different to house insurance, you can only have one house insurance policy
(well if you are paying for two, only one will pay out) but you can have as much life cover/mortgage protection as you are like within reason.

Did you not notice you were paying out for it every month/year?
 
PyritePete said:
thanks BetysGirl,

on 3), I just spoke with our mortgage lender and they tell me that the broker should have arranged all this. Can you just clarify for me what you mean here please ?

Thanks
Click to expand...

You would have had to given a signed instruction to your insurer to cancel your policy.
 
just an update and I would appreciate some feedback...

I have cancelled one of our MPP's (which is assigned to our lender) and I was told I need to get a release of assignment to be sent by our lender to insurance company. Which i did.

But lender says before they send this release of assignment letter, we need to have a/another life policy in place ??!!

I have cancelled the direct debit at the bank, so I am not too worried about any money being taken out

is our lender entitled to ask us for another life policy ??

Is there something I am missing ?

thanks
Pete
 
Did you explain to the lender that there is already another policy assigned to them that will clear the mortgage on death?

Do not underestimate the stupidity of banks. They may not have used their iniative and checked for the other policy.
 
I had a vaguely similar situation a white ago eccept it was with home insurance.

I had a apartment which was covered by a block insurance policy, at the time i took out the mortgage the i was also 'offered' home insurance. A few years later my father noticed this and basically got the bank to refund all the premiums paid for the non block policy (and cancel it) as he said they should have known there was a block policy and as far as i remember you can have two insurance policies for the same thing. Anyway they did after a bit of arguing.

not really sure what the arguement was I was just happy to get a refund :)

I'd argue my case if i were you
 
House insurance is different, if you have more than one you can get a refund cos there will never be 2 payouts. You can have as many life insurance policies as you can get and afford and all will pay out valid claim so therefore you cannot normally get a refund on payments made on the basis that you have another policy unless you had instructed the life company to cancel it and they didnt
 
thanks wbbs, to answer your post # 7 - there were 2 seperate payments taken out each month. I stupidly thought 1 was for me, 1 for Mrs Pete :mad:
 
hi all,

an update on this. I will summarise - On our proposal form, it clearly states via a tick box that was ticked at the time we took out the policy, that our new policy replaces another so I am seeking a refund.

The reply we got back is, as the policy was assigned to our mortgage lender the insurance company claim they weren't able to cancel the policy. When I cancelled this policy, a release of assignment was needed and this was done - all this time the policy was in force.

Therefore, our insurance company said they are not going to refund the full premiums we paid. What they have offered is a payment as a gesture of goodwill and we have 14 days to respond.

Is this all above board, I mean is what our insurance company stating correct or are we entitled to a full refund ? I am skeptical because they claimed earlier that we were not entitled to any refund and because we pursued it, they are now going back on their word.

Thanks,
Pete
 
I think I would be pushing for more, if the box was ticked to replace the existing one then they should have cancelled it and if there was a problem they should have contacted you or the bank to sort. In other words they just ignored the instruction and didn't bother telling anyone they couldn't comply with it.
 
wbbs said:
I think I would be pushing for more, if the box was ticked to replace the existing one then they should have cancelled it and if there was a problem they should have contacted you or the bank to sort. In other words they just ignored the instruction and didn't bother telling anyone they couldn't comply with it.
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Pyritepete. I agree with the above.
.
If new policy replaces another policy by the same Company , there is an obvious duty of care on them.Under Consumer codes they must act in YOUR interests, Demand Full refund or go via their internal Claims process, then maybe Ombudsman. Keep all documentation, Assume they will stall, do NOT get into phone conversations. Stay factual and short.

To say that because a policy was assigned that they can,t cancel it ,seems at best odd !! I can only assume that they might be owned by your lender ?

In relation to Critical Illness etc, Do not assume you are COVERED as you believe you to be , check the small print on exclusions etc. Do a review of what you ACTUALLY need.
 
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