Payment protection/life insurance are they same thing??

[BIGDINNERS]

Iv'e been meaning to look into this for ages and finally found some paperwork regarding a mortgage I took out 10 years ago.

I was forced to take out life insurance by the mortgage broker otherwise I had to pay 2% of the existing mortgage back to the broker,I have a letter which confirms this.

The life insurance policy is not with the bank who gave me the mortgage but was part of the deal,its also payed seperatly to the mortgage.

 

Have I been mis-sold this life insurance and is it the same thing as a PPI claim ??

 

for starters I already had an existing life insurance policy but was told I had to take out this other one or end up forking out £900 there and then to proceed with the mortgage.

I was also self employed at the time,and still am, and think that the policy may be worthless to me:confused:.

 

Any info and advice would be great as Iv'e only yesterday started looking into it and already found that some companies are charging 30% + vat to go forward with a claim,which also seems a bit of a con:huh:

 

thanks

[andyofborg]

PPI is intended to protect payments in the event of unemployment but not death. As you were self employed at the time then a PPI policy may or may not have been appropriate to you it depends on the exact terms of the policy. If you have been missold a PPI policy then you should be able to get your premiums and probably fees refunded. There isn't a need to use claims management companies. You can do it all yourself, however, some people don't want the hassle and are prepared to pay someone to do the work for them.

 

All mortgages have to be protected by a life insurance policy which should guarantee enough to pay off the mortgage should you die. I'm not sure if an existing life policy would be adequate for this since the beneficiary would not be the mortgage provider. Also, would your existing policy provide enough to pay off the mortgage and provide some financial stability for your loved ones?

[BIGDINNERS]

thanks, but still a bit confused as to whether its the same sort of thing what people are claiming for and as to why I had to take out the policy or pay off the broker.

At the time I took out the mortgage I was single with no family,so didnt need any security for any one else,and also had an existing back problem which was explained (by the fiirst policy but not the one with the mortgage) would not be covered if the problem occured again.

basically I was forced to take out the policy or find an extra £900(which I didn't have at the time) to pay of the broker.

[HeadingNorth]

If you had not taken out life insurance and had unexpectedly died, how would your financial estate have paid off the mortgage? (Remember that property values fluctuate wildly and selling the house may not have covered it!)

[Location114]

Im not sure you have a claim here.

 

As i believe all mortgages have to be taken with life insurance so that if you sadly pass away there is some cover for the house to be paid off if it wasnt done like this its too much of a risk for the broker.

 

I get the point at the time you had an existing life policy but obviously should something have sadly happened your estate wouldnt have gone to the broker to cover the remaing balance on your mortgage.

 

Its nothing like a PPI claim if you have been mis-sold insurance on a normal basis you have a claim but even that has a time limit to claim and im not sure that expands to 10 years.

[andyofborg]

thanks, but still a bit confused as to whether its the same sort of thing what people are claiming for and as to why I had to take out the policy or pay off the broker.

At the time I took out the mortgage I was single with no family,so didnt need any security for any one else,and also had an existing back problem which was explained (by the fiirst policy but not the one with the mortgage) would not be covered if the problem occured again.

basically I was forced to take out the policy or find an extra £900(which I didn't have at the time) to pay of the broker.

 

it is ppi policies which people are claiming for.

 

as others and i have said, a life insurance policy of sufficient value to pay off the mortgage with the mortgage provider as the benficiary is a requirement of the mortgage. i would imagine that if you weren't going to get a policy on your own behalf then the broker would have had to get one for you.

 

what exactly is your first policy?

[*Turbo*]

Couple of things regarding the payment protection. When sold with a mortgage it is usually called mortgage payment protection (unless you had a separate income protection) and usually pays a percentage of the mortgage monthly payment of approx 150%

 

It usually pays for accident, sickness and unemployment. Being self employed if you wanted to claim the unemployment element you would have usually only been able to claim if you wound your business up. This would obviously make it difficult to claim on the policy therefore I would imagine you can make some sort of claim for the back payments.

 

Accident & Sickness is as it says. Obviously pointless if you never have an accident or sickness and can be valuable if you do claim. Same as all policies.

 

Bit confused about peoples comments about HAVING to take life insurance:huh: Only time this happened is if you had an endowment mortgage as this was part of the savings plan or before deregulation, think 90's? Also being single it was usually recommend that you take critical illness cover as life would be pointless - assuming you have no dependence but again not compulsory..

 

Mortgages brokers primarily make their commission through selling insurance policies. The mortgage makes small part compared to a decent insurance life insurance policy.

 

There were/are a lot of dodgy mortgage brokers about especially before FSA took over the regulation of mortgages. Mortgage brokers will probably be a miss selling scandal all over the newspapers in the future.

 

A typical sales pitch would be to scare the life out of you with stats and sell you as much as possible. As mentioned, can be valuable with just the one parent working and 2.4 children but not always like unemployment cover for you.

 

Also in them days (and at least until 2007 that I know of) a lot of policies like this were paid up front and added to the loan!!!!! The broker would earn great commission of approx 6k which would be added to the loan and the mortgage holder would pay interest on it!!!!

 

Amazing what brokers did years ago..