hi i have a ( self assurance mortgage life ins plan) with Scottish provident to pay of my mortgage with the halifax

my question is if i cancel this ins policy can halifax force me in to taking out another life ins policy
i have separate bulidings and contents ins

Asked by timswift20

2 Answers

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Answered by Paul Skinner, IFA in Odiham, HAMPSHIRE
Hi Tim,

It is very unlikely that your policy is "assigned" to Halifax, and, as such, Halifax would not know whether you cancel the policy or not. As far as I am aware all lenders strongly recommend you take out life cover, but I am not aware of any that make it a condition of the mortgage to have it.

Regards

Paul Skinner
PKS - Mortgage & Insurance Experts
Save up to 50% on the cost of life cover, ask about RLPs.
T: 0845 226 5009
E: paul.skinner@pks.org.uk | 09.26.12 @ 18:45
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$commenter.renderDisplayableName() — {comment} | 11.20.17 @ 17:18
Answered by Richard Salter, IFA in Trowbridge, WILTSHIRE

Cancelling life cover in connection with Halifax Mortgage

Paul is correct. No lender may now make it a condition of a mortgage loan that you must take out life assurance cover with them. Indeed individual circumstances should dictate whether life cover is necessary at all. For example If you were single with no financial or physical dependants then there is an argument life cover is not needed at all - though serious illness cover is still likely to be more than sensible !

You say this policy is/was designed to pay off your mortgage. If so it will be an endowment style investment and life policy combined. Cancelling such a plan will not only leave you without life assurance cover but also with a gap in how you repay the mortgage loan itself. Of course surrendering an investment based plan should generate a cash payout of its accumulated value to date. You will be well advised to use any such 'surrender value' to repay as much of the capital borrowed as possible. However surrendering before your insurance plan has had time to build up sufficient to pay off your mortgage will presumably leave a good deal of your mortgage debt outstanding. You will need to switch this over onto a simple repayment basis. This will increase the monthly amounts you need to pay to your lender as they will need to start collecting repayments of the capital borrowed by you as well as interest on the loan.

Before you cancel any existing cover :-
1. first check with the provider what its 'surrender value' will be
2. then check how much you will owe your lender if you use your surrender value to reduce your mortgage
3. then get a quote for how much your monthly mortgage payments will go up to, to cover the additional loan repayments you will now have to start repaying direct to the lender (you may find you need to extend your loan repayment term to afford the monthly payments
4. then check that any replacement life cover will not cost 'an arm and a leg' (perhaps because your health is not as good as when you took out your original cover - or you have taken up smoking - or simply you are older than you were!).
Finally - if you will want ongoing life insurance NEVER CANCEL EXISTING COVER UNTIL YOU HAVE BEEN ACCEPTED AND PLACED 'ON RISK' WITH A NEW POLICY To do otherwise is to risk your being uninsured or even finding that you have become uninsurable !!
Hope this helps
| 09.27.12 @ 17:17
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$commenter.renderDisplayableName() — {comment} | 11.20.17 @ 17:18
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Answered by

Paul Skinner
Paul Skinner, IFA in Odiham, HAMPSHIRE

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