A client came to see me recently about the fact that his partner had died without life cover with the result that their joint mortgage remains uncleared.
They had had a Scottish Amicable joint-life first-death low-cost endowment that would have paid out if it were not for their having cancelled it a few months earlier.
How this came about is that they had visited their local Lloyds TSB branch for a top-up to their mortgage to fund some home improvements. While there, they showed the “customer adviser” the latest projections they had received from the Prudential for their low-cost endowment. He quickly latched on to the possible shortfall of £11,000 and recommended that they:
1: Surrender the endowment.
2: Take out a new Lloyds TSB repayment mortgage and
3: Effect a new joint-life first-death mortgage protection policy, presumably with Black Horse Life – or whatever life company it is that Lloyds TSB use these days.
The recommendation document made no mention of the penalties for surrendering the endowment nine years early, less still of any MVR, although it did advise against surrendering the endowment before their replacement life policy was in force.
Unfortunately, the clients overlooked the last bit and surrendered their endowment without waiting for the new policy to go on risk, which it never did because the female life was declined.
Are you listening, Mr Tiner?