MyFinances.co.uk
News feeds Free newsletter

All the latest personal finance news - helping you make the most of your money

Ask the insurance expert

Life insurance sold alongside a mortgage?

Friday, 04 Apr 2008 14:13
A reader from London is finding their mortgage lender is trying to make her buy insurance along with her home loan.

The myfinances.co.uk team offers some help.

Abigail from London asks:

I took out a mortgage two years ago hassle free. Now I'm moving house and this time, even with a good LTV and good salary, I'm being put under a lot of pressure by my mortgage lender to take out life insurance and other insurance policies, with the implication I might get turned down if I don't take them, although they're not mandatory.

They say the Financial Services Authority (FSA) forces them to either arrange these policies or give a very good reason why I don't need them. But I feel they are unsuitable for me.

Are they just giving me the hard sell and pretending it's the FSA? Or have things really changed that much in two years?

The myfinances.co.uk team reply:

Generally, consumers do not have to buy life insurance when they take out a mortgage - and it is not a regulatory requirement.

Although a financial business advising or selling mortgages might suggest it would be a good idea to do so in certain circumstances; for example, where you are the main earner in a family and mortgage payments are dependant on your salary.

If you decide you don't want to take out insurance, you might like to explain to the company selling it why you don't think it is necessary in your circumstances.

The Financial Ombudsman Service, which oversees complaints against firms in the financial services sector, sees complaints both from consumers who say that they were "mis-sold" insurance and from consumers who say that they should have been advised to take out insurance to protect them against an unexpected life event.

For help with complaints over insurance go to the Financial Ombudsman Service website.

If you have a question for one of our team of experts go to the myfinances.co.uk Ask the Mortgage Expert section.



Disclaimer:
myfinances.co.uk is not authorised to give advice under the Financial Services and Markets Act 2000.

Terms:
By using this site, you are deemed to have accepted our terms of use.

myfinances poll 

As a global banking crisis hits, we want to know how the crisis is affecting you. Is your money safe? Vote now and tell us your views.

Free stuff 

Sign up for our free daily newsletter and other free stuff.