Mortgage Protection Policy

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bish123

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We have a dual life mortgage protection policy which we bought at the time of initial purchase of current house. It mentions 'The guaranteed insurability option does not apply to life 2' . What does it mean in layman English ? We are planning to switch and the outstanding amount is considerably low than initial purchase price. Should we look to renegotiate policy at the time of switching mortgage to bring down the monthly payment?
 
Guaranteed insurability is a feature offered by some insurance companies that allows you to continue your cover beyond the original agreed term regardless of your state of health at the time you choose to do it. If it was declined to whoever is named as "Life 2" on the policy, then it just means that if they want to extend the cover, they will need to fill out an application form with current details of their health.

bish123 said:
Should we look to renegotiate policy at the time of switching mortgage to bring down the monthly payment?
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Some policies are more flexible than others. Some Mortgage Protection policies cannot be amended like this; others can. Definitely worth asking them. Make sure that the expiry date of the policy ties in with the expiry date of your new mortgage.

While you're at it, get a quote for a new replacement policy from a broker. Given a general drop in life insurance rates across the board, a new policy might work out cheaper anyway.
 
If you pay a lump sum off your mortgage and it significantly reduces the term, should your mortgage protection policy fee reduce?
 
Elderflower said:
If you pay a lump sum off your mortgage and it significantly reduces the term, should your mortgage protection policy fee reduce?
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Not necessarily. My reply to @bish123 applies to this question also.

Dave Vanian said:
Some policies are more flexible than others. Some Mortgage Protection policies cannot be amended like this; others can. Definitely worth asking them. Make sure that the expiry date of the policy ties in with the expiry date of your new mortgage.

While you're at it, get a quote for a new replacement policy from a broker. Given a general drop in life insurance rates across the board, a new policy might work out cheaper anyway.
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Your Mortgage Protection will not automatically be adjusted. If you want to examine possibilities as I suggest above, you'll need to make the enquiries.

Have your overpayments contractually reduced the term on your mortgage? As in - do you have it writing from your lender that the expiry date of your mortgage is now X as a result of your overpayment? If not then they will probably not agree to changing the term on the Mortgage Protection policy.
 
Thanks Dave. Yes have it in writing from the bank that our term has reduced. Took out a 14 yr mortgage in 2019 and we now have 6 yrs left on it but still paying the same mortgage protection. Thanks for info, will look into it.
 
Shop around, you will get way cheaper.

When i had a mortgage, 2 things i learned:

1) Never take out mortgage protection from a bank

2) Review every few years, and switch provider.

I think i was with at least 7 different mortgage protection providers, allthough it was only the ultra basic decreasing insurance cover i went for, every time i switched, it was cheaper, and for the last few years, i cancelled the policy, when the mortgage balance dropped below 50k, that maybe against bank rules, but i did it anyway, as i knew we would be clearing it a few years early.
 
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