New To Scoob

In the process of getting a new mortgage sorted out and the FA had pointed out that he can get us better insurances on our previous endowment than what we are paying already, here comes the sticky bit, according to the Pru we are now due them some sort of charges for cancelling their overpriced insurances and taking them with somebody else !!!!! has anybody else had this or are they just tring to take the P.... I am already tring to claim miss selling from a previous advisor about this policy should I contact the FSE about this aswell ??????


John.

ProperCharlie

is this life insurance? i am in a similar position with that - just found out that i can reduce my current life insurance payments by about half (via motley fool ). i don't want to change mortgage, however. do i just cancel the policies that i no longer want and let the IFA concerned get the hump?

New To Scoob

PC, yup it's life cover and possibly the critical illness cover aswell basically we're in the same position as yourself, we can half our premium by going else where, I'm just wondering if it is legal for the lender to charge us a cancellation fee as it seems a bit off IMO.

John.

Spoon

As like all these robbing companies they are taking the píss but, and it's a big but, if they have worded a lock-in on the contract then you are stuffed.

Yes you could try and fight it but I'm sure it won't be worth it.

You signed a contract that stated you were to pay a penalty should you move to another provider within a certain timescale.

Your beef is with the advisor and not the Pru really if he never advised you of a lock-in.

ProperCharlie

it never even occurred to me that there would be a lock in period with life insurance - guess i'll have to dig the documents out and have a look. had the policies for just over 12 months so far.

EddScott

If you've changed your mortgage to a "Capital and Repayment" mortgage (where you pay off capital and interest together) an endowment policy is not the correct insurance policy as the maturity value of the endowment is not required to pay off the mortgage at the end of the term.

If you have a Capital and Repayment mortgage your most suited insurance policy may be whats known as Mortgage Protection. This policy starts with a value usually the same as your outstanding mortgage and decreases every year in line with your decreasing mortgage debt. This type of policy only pays out in the event of your death and has no maturity value. Your premium for an endowment does two jobs - pays partly towards life assurance and partly towards investment to fund the maturity value. As a maturity value is not required for capital and repayment mortgage the premium for your live assurance may be cheaper or the sum assured may be higher as your premium only pays for life assurance.

If your changing any policy DO NOT cancel an existing policy before the new policy is on risk or you risk not being covered. As for an IFA getting the hump if the policy is under 4 years old the insurance provider may clawback some of commission paid to that adviser (its like commission on car insurance) its a pain but one of the pitfalls of advising on life assurance policies.

/edit I've never come across life assurance that charges you if you cancel the policy. Are you sure you don't mean an early encashment charge on the fund value of the endowment? This may be the case but is nearly always stated on any quotations provided by the insurance company.

New To Scoob

Spoon, thanks, I'll have a look at the policy but the Insurances have been running for almost five years surely theres not a lock-in of that length hopefully, don't worry the previous FA is being investigated by the Finiancial Ombudsman as we speak hopefully.

John.

ProperCharlie

it's mortgage protection that i need. at the moment i am paying £60 something a month to cover the wife *only*, death and critical illness. i decided to do away with critical illnes and got a quote to jointly cover us for £15 a month. the only slight ptoblem is the IFA who arranged the first one does my pensions and all the compnay stuff, so i don't want to fall out with him.

EddScott

ProperCharlie - You may be able to make alterations to your existing policy depending on who you are with. If you don't want to upset your current IFA ask him to either make the alteration or provide an alternative quote with your new requirements. At least your giving him the chance to retain your business.

Bear in mind although expensive Critical Illness IMHO is important however recent changes to the definitions of CI cover have made it rather expensive.

ProperCharlie

Cheers for that, Edd. I will show him the other quote and see if he can get in the same ball-park. it doesn't seem that likely, though, based on the rates in the old policy.

Diesel

I took out a joint life insurance policy separately from my IFA arranged mortgage. He was very helpful with the mortgage and got that comission for his help and advice, however I was not willing to pay the EXTRA £20 a month premium for life through him.

So, paying £32 via NU for joint life and about 250k NON reducing cover (lets face it I'll NEVER pay that capital off over 25yrs!!!!)

Shop around mate - its your hard earned...

EddScott

What are you saying there Diesel? Had you gone with your IFA the life cover was £52 but going to Norwich Union was £32? Never experienced the difference of going direct or through an IFA to be that high.

Also, non-reducing cover or Level Term Assurance is most suited to "Interest only" mortgages as your capital is not reducing or if the individual wants the ability to provide for the suriving spouse/family etc.

Not all IFAs are pushy salespeople looking for money Be more concerned about some bank advisers whose job depends on sales levels.

Diesel

Ed, yes the difference was about that much for the same cover (give or take a fiver I guess...)

And yep I chose non reducing cover as it will take a lot of capital repayment to dent the mortgage (like 12k a year - forget about it!) and any that we manage will help provide if I get knocked off me bike!

Very happy with the IFA and he gained my trust (and I refused to touch any for 12yrs b4!). It's just good to make a yearly saving that pays for a trackday and a tankfull