Here’s a great case study that underlines the importance of using a knowledgeable mortgage adviser who also knows about life assurance.
Tom & Alice had recently arranged to buy a property under the government’s help to buy scheme. They had received their mortgage offer and the offer from the Government agency who were providing the additional funds.
They sat down with their mortgage adviser from Manchester Mortgages who discussed with them how they should protect the Mortgage loan. After looking at all the options available to them they decided to arrange the policy on a joint life basis protection 50% of the loan for Critical Illness and 100% of the loan for Life Assurance. Manchester Mortgages advised that the company recommended would provide free cover between the exchange of contracts and the completion of the purchase. This was to be crucial with what happened next.
Manchester Mortgages submitted the application to the insurer and the policy was accepted on standard terms. Tom was very organised and when they received all the paperwork from the insurer asking them to check their details he read it carefully and signed and sent the paperwork back, remembering what Manchester Mortgage had told them and respond to all paperwork received promptly.
Tom & Alice then exchanged contracts with the Builder paying their 5% deposit and agreed a date for moving into the property some 8 weeks later. So their mortgage was arranged and their life assurance and critical illness policy was ready to start and both Tom and Alice were extremely excited about owning their new home. Then tragedy struck!
Manchester Mortgages received a very emotional call from Alice saying that Tom had been killed the previous evening in a terrible road accident. Alice was at a loss what to do and was looking for help from us. We first spoke to the solicitor advising of the sad situation which has occurred and asked what was the procedure as Alice did not want to proceed with the purchase.
After looking at the contract the solicitor advised that Alice did not have to continue with buying the property as it had been in joint names and as one of the parties had died the builder could not enforce the purchase as Alice could not obtain finance in her own right.
After we had read the terms and conditions of the Life Assurance policy it would appear that Alice could make a claim on the Life Assurance contract that Tom and herself had arranged.
The reason why she was able to claim was because of the following reasons:
1) That both Alice and Tom had been accepted by the Life Assurance Company on their standard terms
2) Tom had been organised and sent the paperwork back to the Life Assurance Company
3) Although they had exchanged contracts they had not completed on the purchase.
As long as points 1 & 2 had been met the Life Assurance Company were able to provide FREE cover between exchange and completion and the claim was submitted.
Now there isn’t a happy ending to this story as Alice has sadly lost Tom.
However, due to the good financial advice provided by Manchester Mortgages in respect of protecting their mortgage and selecting the right company Alice is expecting to receive a sum of money.
It is no compensation for losing Tom but what it will do is allow her to have one less worry and reduces the financial pressure in which continues to be a very difficult time.
Lots of people say it wont happen to me but sadly as the above case shows tragedy can happen at anytime.
Manchester Mortgages are able to provide good and solid expert advice in how you can protect your mortgage and your loved ones.