Mortgage insurance policy - help please!

dan_d

Hi everyone, this isn't one of my normal haunts and I'm pretty ignorant on insurance matters, so please bear with me on any stupid questions I might ask.

I have been paying a mortgage insurance policy the last 2 years (ie one that covers mortgage payments for up to a year in the case of redundancy). I am being made redundant and was filling the claim form out with my employer recently.
There is a question on the form "is redundancy a regular feature of this job", or something to that effect - tick yes or no.

It was remarked on that since I am a site engineer, it could be argued that redundancy is a regular feature (construction industry), therefore the payment would not be made. I have been thinking about this, and I'm wondering could anyone tell me if this argument is possible.To my way of thinking, it shouldn't be.

They allow you to take out the policy and pay the premium, while knowing what your career choice is - surely if it was a career where redundancy is a feature, then they should tell you not to bother taking out the policy as they won't pay out? Now I know it's all a money making game etc, etc, but again, surely it's not at their discretion to decide, when a claim is made, whether or not your career is an unstable one? I've paid the premium (which has vastly increased in the 2 years, I might add), I've been in solid employment since I left college, with the same company on their graduate programme. Redundancy hasn't been a feature in my company until now - we've been lucky. We bought a house 2 years ago and took out the policy while things were still good and to be honest, we're totally over-insured, they'll only be paying out a fraction of what we're insured for to cover my side of the mortgage payment.(that's another story completely)

While I accept that insurance companies obviously want to make money etc, could someone tell me if my view of this is too simplistic? And if they do come back and argue the above, is my argument valid?? Because, to be honest, if my argument is not valid, I'll be cancelling my policy immediately as it will be a gigantic waste of money.

killers1

Dan,
In view of the fact that you have been paying premiums for 2 years plus I cannot see the insurance co. not paying out. The clause in these types of contracts can be misleading as they say something along the lines of 'if it was reasonable to assume you could be made redundant you might not be covered'. From hands on experience of these types of policies I reckon your payments will be honoured for up to a year. They will constantly contact you during the year to see what efforts you are making to secure new employment. In relation to you only getting a fraction of the amount of cover is probably due to taking the policy in joint names and deciding on a split i.e 50/50 or 40/60 or whatever you chose with your partner. You would only be paid out 100% of the cover if you both lost your jobs. Hope this helps.

dan_d

Thanks killers. We've split the cover 50/50, but we are still over insured, however that's not really an issue. Once they cover the payment amount for me, anyway. It's more the argument that "redundancy is a feature" that I'm concerned about. I know it can be a bit of a battle to get this insurance sometimes, but thanks for making me feel a bit better about the whole thing!