Mortgage Protection cancelled after payment taken. Claim on subsequent death?

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The Inquisitor

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Hi

My brother purchased mortgage protection insurance when he bought his home in 2006. It was a basic mortgage protection insurance policy which pays outstanding mortgage amount to bank in event of death. Unfortunately, my brother passed away late last year.
His mortgage protection insurance provider wrote to him in March 2022 telling him that his policy had been cancelled by them due to non-payment of the fee, but we can see that there is a payment in January 2022 for the exact amount of the Mortgage Protection Insurance fee by cheque from a bank account.

We now believe that the Mortgage Protection Insurance provider may have cancelled the policy in error in 2022.
Is it possible for the bank to tell us if his Mortgage Protection Insurance provider cashed the cheque in January 2022?
If so, what recourse do we have regarding making a claim for the outstanding mortgage against his Mortgage Protection Insurance provider?

Thanks
 
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Could the cheque have bounced or do you have evidence that it cleared?

If you think that the policy was cancelled in error then the executor of the estate should enquire with the underwriter, make a formal complaint if necessary, and if that doesn't resolve it get a final response letter and take the issue to the FSPO if there is a genuine complaint to be made.

Submit a Complaint | FSPO Complaint Process | Financial Services and Pensions Ombudsman (FSPO) | Ireland

Learn how to submit a complaint to the FSPO, including steps, time limits, and necessary documentation for financial and pension disputes.
www.fspo.ie
 
Sorry for your loss.

How often was the fee paid? Monthly? Did he always pay by cheque?

Did he seek to challenge the cancellation or continue making payments?

I would take legal advice on this topic. The sum involved is quite large and the executor could make missteps on this. Part of this could be an FPSO complaint as @ClubMan advises but I would engage a solicitor on this.
 
The Inquisitor said:
His mortgage protection insurance provider wrote to him in March 2022 telling him that his policy had been cancelled by them due to non-payment of the fee, but we can see that there is a payment in January 2022 for the exact amount of the Mortgage Protection Insurance fee by cheque from a bank account.
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The time to challenge this and fix it was back in March 2022.
He was notified that his policy was cancelled.
He didn't take any action to challenge it.
He didn't take any action to get a new policy.

A lot of people intentionally, let their policies lapse, especially if they were single and had no dependents.
 
The Inquisitor said:
we can see that there is a payment in January 2022 for the exact amount of the Mortgage Protection Insurance fee by cheque from a bank account.
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Yes.
Your brother wrote a cheque.
He sent it to, say, Irish Life.
They lodged it to their bank account.
The bank sent it to his account for collection.

So his bank either has the cheque or should be able to get it.

(I believe that, these days, the bank where it is lodged holds onto the physical cheque. But that is not your concern.)

The cheque will tell you what account it was lodged to.

Is it possible that he paid it to a broker, who did not pay Irish Life?

You would find this out from the cheque.

If he did, you might have a claim against the broker, but that is speculation. Get the paid cheque first and then decide what to do.
 
Thanks all for your responses.

I checked the account, and the cheque didn’t bounce, the amount was not re-credited to his account. I assume that once the cheque was cashed, that it was cleared.

The fee was paid annually in January every year. And the payment was always made by cheque, and it was paid directly to his insurance provider, there was no broker involved as far as I know.

I believe that he got confused by it being cancelled, he didn't understand why. As it was cancelled by the insurer, he didnt make any further payments into a policy that the insurer had terminated. I believed that he wanted to get a new policy but he thought that he would never get a new one due to his medical situation, so didn’t pursue that option further due to that.

He didn’t intentionally leave it lapse, evidently, the fee was paid when it was due evidently. If so, the insurance provider broke the contract?

I will meet the bank along with his estate executor and will ask the bank for a copy of the front and back of the cheque and will revert here.

Regarding a solicitor, yes that is a good question. If we liaised with the insurer (and potentially FPSO) using a solicitor, would that speed it up?


Even though it was in 2022, my understanding is that there a 6 year statute of limitations on cases like this? It only came to light this week on examination of the accounts that this payment was apparently actually made in January 2022.
 
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The Inquisitor said:
If so, what recourse do we have regarding making a claim for the outstanding mortgage against his Mortgage Protection Insurance provider?
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I would suspect little or none
Your brother was notified that the policy was cancelled, it was up to him at that time to engage with the insurance company as to why
He would have also presumably been notified by his mortgage provider probably twice a year that there was no protection policy assigned to his mortgage
I think he might have had some sort of recourse back in 2022 if something had happened but not in 23' or 24' as he had no policy in place
I see you've a solicitor, what have they said or advised you about this matter??
 
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The key thing here was the policy cancelled in error or not by the policy holder. I'm assuming here that it was an annual payment and not a monthly one.

In addition to getting a copy of the cheque, ask the bank to put a trace on the funds. From the sounds of it, you can see it being debited but you don't know where the money went. So this could be a banking error, an error by your brother (he lodged it to the wrong place) or an error by the insurance company.

Had they cancelled it in error, then you might have a claim if your brother died in the period he would have been covered, especially as they did not refund any premium. However from the sounds of it, he died over 2 years after the policy was cancelled so I would have thought it would be very difficult to claim against an insurance policy that he never paid for.
 
I am sorry to hear of your brother passing. It might be worth checking the terms of the policy, as some pay out in certain circumstances before death. So they may have been due to pay out before the policy was terminated if this was applicable.
 
Dr Strangelove said:
I would take legal advice on this topic. The sum involved is quite large and the executor could make missteps on this. Part of this could be an FPSO complaint as @ClubMan advises but I would engage a solicitor on this.
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The Executor should first established the facts.

If the cheque for this amount was not actually paid to the insurance company, then the case is closed.

If the cheque was cashed by the insurance company and the policy was subsequently cancelled, why did they cancel the policy? Why did your brother not take it up with the insurance company? Did he try to revive the policy? The insurance company probably has a file on it.

There is very unlikely to be any legal issue here. There is very unlikely to be any wrongdoing by the insurance company.

The system is designed so that a customer can go to the Financial Services Ombudsman with a complaint without the need to spend money on a solicitor.
 
You have to go through a complaint process with the insurance company before it is furthered with any other body. It is only after the complaint process is exhausted that FSPO will get involved (and it saves them from being inundated with complaints).

You can bet your bottom dollar that the insurer will fight this all the way, so gather all the information you can. It will be difficult though as a number of years has passed without any complaint being made about the policy being lapsed. They will obviously argue that your brother never raised it with them that he had paid his 2022 premium and therefore his policy shouldn't have been cancelled.

Good luck.
 
Thanks again for your input.

Some responses and clarifications:
- the insurance company cancelled the policy, not my brother. He was making annual payments up until the time they cancelled it.
- with the executor, Ive contacted the bank that issued the cheque to get lots more information as described here, and they will have more information about it in the coming days.
- the premium was paid every year since 2006. If the insurer had not terminated the policy, it would still have been in place up to the time of his death.
- nothing happened in January 2023, as the insurer terminated the policy in March 2022.
- we don't believe that the policy would have paid out before his death.

I can clarify that once my brother found out that the Mortgage Protection insurer (Bank Of Ireland Life) had cancelled his policy in March 2022, he did take it up with them to try to revive it.... he contacted them through the manager at the Bank Of Ireland branch to get it re-instated because it was paid for. BOI Life told the bank manager to tell my brother that the cancellation would stay in place as they again stated that they had not received payment. So he did engage with the insurance company.

We have yet to get legal advice on this particular matter. We may do so in the coming days if required.

Thanks again.
 
The Inquisitor said:
I can clarify that once my brother found out that the Mortgage Protection insurer (Bank Of Ireland Life) had cancelled his policy in March 2022, he did take it up with them to try to revive it.... he contacted them through the manager at the Bank Of Ireland branch to get it re-instated because it was paid for. BOI Life told the bank manager to tell my brother that the cancellation would stay in place as they again stated that they had not received payment.
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If I paid for a year's insurance and the company told me that they did not get my payment, I would not say "That's fine - leave it cancelled so."

I would follow up and get the policy reinstated.

and if they refused, I would raise a complaint.

And if they still refused, I would go to the Ombudsman.

I think you have been told only half the story
 
About

"I would follow up and get the policy reinstated.

and if they refused, I would raise a complaint.

And if they still refused, I would go to the Ombudsman."

Sure I can understand that. But not everybody could or would, rightly or wrongly. He had a lot going on with his health at the time and that was taking up all of his focus.

I'm determined to get to the bottom of it for sure.
 
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