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Death but no life insurance situations

Help and discussions for strategies to get out of debt
Gerry557
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Death but no life insurance situations

#369575

Postby Gerry557 » December 24th, 2020, 4:39 pm

Moderator Message:
RS: This topic moved to Dealing with Debt board as not really suitable for DAK. Shadow left on DAK




Looking for advice to offer after finding out that two unfortunate couples have lost their partners but didn't have any life insurance.

Both stand to loose their homes and main breadwinners. Unfortunately I know little about benefits available or any other help that might be offered in certain circumstances.

So knowledgeable Lemons, any useful advice to offer or experience to share.

I don't know full details of each couple but assuming that savings would be relatively small if any at all. There partners were both working so I assumed that there also might be some sort of pension pot, again I expect this to be small ish as both were young.

So would the funds into pensions be returnable? As single mums now with kids (x2 and x3) some school age others below with part time income only would mortgage interest be paid from benefits? Wasn't sure if it's classed as a loan now instead. Does selling up mean your making yourself homeless so no entitlement to etc

Are there widows benefits etc

Yes it's relatively cheap for life insurance, I think a tenner a month or so and I can't understand why they didn't have any. Thought you need to have some to get a mortgage in the first place but maybe if funds are tight it gets cancelled afterwards..... And you're young so it's never going to happen etc.

Thanks in advance for any help or information.

sg31
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Re: Death but no life insurance situations

#369590

Postby sg31 » December 24th, 2020, 5:16 pm

One thing to look at would be their terms of employment. If they are salary earners they might have some death benefit in their contract.

I'm really surprised they have a mortgage and no life cover. Whoever set up the mortgage for them missed a trick there. Term assurance for the life of the mortgage is cheap as chips. Maybe there is cover that the wife just doesn't remember.

I can't help in respect of benefits, it's not something I know about.

gryffron
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Re: Death but no life insurance situations

#369600

Postby gryffron » December 24th, 2020, 5:47 pm

Terrible situation, especially at Christmas, BUT, this is for practical advice so...

Definitely talk to the employer. Some companies and/or Pension schemes have Death-in-Service benefits. Failing that, any cash they have paid into a defined contribution scheme should be immediately returnable. Pensions are mandatory now so everyone should have something.

Check the mortgage small print. Again, some mortgages come with bundled life insurance. I thought it was a requirement too, to prove you had it in order to get a mortgage. But maybe not for interest-only mortgages? Or maybe as you say they cancelled it.

Check the gents' bank statements
a) to see if they were paying any insurance premiums the partners didn't know about
b) to see if they are paying off any other debts. Car? Phone?
c) to cancel all the unneccesary junk many of us subscribe to.

Talk to benefits people NOW. Well, Tuesday morning. Actually, I think you can apply online for Universal Credit, so do it NOW, today. The sooner you start claiming the sooner you might get some cash, however pitiful.

Talk to the mortgage company NOW. Don't wait. Don't put it off. Don't wait until they can't afford to pay. They might be willing to freeze interest or suspend a few payments for a while to allow the ladies to sort themselves out.
Ditto any other debts they may have.

There are no benefits to pay a mortgage. Yes, govt will provide short term loan to cover the mortgage interest payments while you sell. This avoids a "fire sale" and ensures they get the best price for the owners (which also means less benefits to pay of course)

Citizens' Advice have great advisors on claiming benefits. they're often more use than the benefits office themselves. Make an appointment to talk to them asap. Try and work out your questions in advance. Take a pen and make notes.

No, being forced to sell your home would not count as deliberately making yourself homeless. Although, since they'll likely have a heap of cash after selling, this will significantly affect the benefits they can claim.

Talk to everyone. Do it immediately. I know they would rather lock themselves in a room and grieve. But don't wait!

Gryff

gryffron
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Re: Death but no life insurance situations

#369648

Postby gryffron » December 24th, 2020, 10:12 pm

A couple more thoughts:
Contact local council about council tax. They may get a discount.
Were they in trade unions or professional bodies? These sometimes have hardship funds for precisely this situation.

Gryff

dspp
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Re: Death but no life insurance situations

#369665

Postby dspp » December 24th, 2020, 11:19 pm

I thought it was impossible to have a mortgage without having life insurance. Check this carefully - it wouldn't pay a widow's / widower's pension, but it at least would pay off the mortgage. It may not be described as being a life insurance, it might be described as being 'mortgage insurance'. The mortgage company will most likely know, ask them asap. Also ask whoever arranged the mortgage.

If they were members of any professional bodies (engineers, dentists, whatever) and/or trade unions then there may well be a hard-times fund to assist cases such as these, or similarly if any of them were ex-forces (go to SSAFA in the first instance).

regards, dspp

airbus330
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Re: Death but no life insurance situations

#369668

Postby airbus330 » December 24th, 2020, 11:39 pm

dspp wrote:I thought it was impossible to have a mortgage without having life insurance. Check this carefully - it wouldn't pay a widow's / widower's pension, but it at least would pay off the mortgage. It may not be described as being a life insurance, it might be described as being 'mortgage insurance'. The mortgage company will most likely know, ask them asap. Also ask whoever arranged the mortgage.

If they were members of any professional bodies (engineers, dentists, whatever) and/or trade unions then there may well be a hard-times fund to assist cases such as these, or similarly if any of them were ex-forces (go to SSAFA in the first instance).

regards, dspp


Unfortunately, it is possible. I never had life insurance for any mortgage I had since 1983. I had other ways to cover the debt, but the bank didn't know that. The system was still the same when I took my last one out in 2013. In other circumstances I would have had the cover, of course.
People are sometimes surprisingly secretive over financial affairs, even between spouses. Perhaps a very careful look at the banks statements and CC statements might show a premium being paid. Otherwise, death in service benefits from the company pension is the best bet.
Sad story to read on Xmas Eve. GL

NeilW
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Re: Death but no life insurance situations

#369681

Postby NeilW » December 25th, 2020, 7:32 am

Gerry557 wrote:So would the funds into pensions be returnable? .


If they were employed full time, rather than working for themselves, it's may be that the pension scheme offers death in service life cover. It's a very cheap perk for employers to set up and is often in place in older pension schemes.

If it's just a modern auto-enrolment pension like NEST then there is less cover, but the estate of the person who has died will receive the money in the pension pot tax free. See https://www.nestpensions.org.uk/schemew ... I-die.html and https://www.nestpensions.org.uk/schemew ... -died.html

That's a double edged sword in that it will get used up paying back the mortgage and leave the beneficiaries without pension cover. However I suspect at this point saving the house is the first priority.

HTH

NeilW

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Re: Death but no life insurance situations

#369688

Postby johnhemming » December 25th, 2020, 9:07 am

I stopped doing welfare casework 5 years ago and the systems do change.

1. If making any welfare claims it is a good idea to claim ASAP as things are not necessarily backdated much or at all. (Backdating limits are likely to vary)

2. There are deals available on council tax that vary from council to council, but also a single person discount. (single adult).

3. The DWP will probably pay interest at a defined rate (that was the situation 5 years ago) on a mortgage up to a certain amount. However, the mortgage company will need to swap to an interest only mortgage. Generally they understand this. If there is no income it is probably a universal credit claim.

4. There are often welfare rights advisors that can be spoken to. That can be useful to check these things, but the information should be available on the net.

5. I have found in the past that some people have a problem making online applications for benefits so I have sat with them when doing this often doing the typing for them. It may be worth making this offer. I am pretty certain all the application systems are online. Not a thing to do over Xmas, however, but maybe worth doing from Sunday onwards.

gryffron
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Re: Death but no life insurance situations

#369703

Postby gryffron » December 25th, 2020, 10:53 am

johnhemming wrote:3. The DWP will probably pay interest at a defined rate (that was the situation 5 years ago) on a mortgage up to a certain amount.

Just to be clear. This is (now) a loan to support the sale of the house. Not a benefit to let you continue living there indefinitely.
https://www.gov.uk/support-for-mortgage-interest

Gryff

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Re: Death but no life insurance situations

#369717

Postby johnhemming » December 25th, 2020, 12:31 pm

gryffron wrote:
johnhemming wrote:3. The DWP will probably pay interest at a defined rate (that was the situation 5 years ago) on a mortgage up to a certain amount.

Just to be clear. This is (now) a loan to support the sale of the house. Not a benefit to let you continue living there indefinitely.
https://www.gov.uk/support-for-mortgage-interest


I have looked at this and it looks to me as a loan to prevent the forced sale of the house, but it should be noted that when the house is sold or transferred the loan needs to be repaid although any deficit is written off.

The prior system had a limit on the amount of interest paid that at times was difficult to resolve.

Gerry557
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Re: Death but no life insurance situations

#369723

Postby Gerry557 » December 25th, 2020, 2:17 pm

Thanks all for the replies so far. At least some small crumbs of comfort that possibly the situation might not be totally dire as first envisaged and that a window of assistance might overcome the immediate needs.

Obviously longer term is still not great but some good suggestions of something worth more investigation. Maybe not for today though and thanks once again to those giving up their time today.

Maybe a highlight campaign to try and prevent others ending up in the same situation to save a relatively small amount of money, if that was the reason behind it all.

There have been some slightly more positive news, a go fundme campaign has resulted in funeral costs being covered for one family and the deceased donated his organs so maybe someone else got their Christmas miracle.

Will pop back later


Chrysalis
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Re: Death but no life insurance situations

#369802

Postby Chrysalis » December 26th, 2020, 8:42 am

There is still widows benefit, it has been reduced but there is still something, I am sure.

https://www.citizensadvice.org.uk/benef ... t-payment/

Gerry557
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Re: Death but no life insurance situations

#370267

Postby Gerry557 » December 28th, 2020, 7:41 am

Thanks once again for the links, lots of useful info.

There is some more on the situations that probably have some bearing on the advice. One couple was married and the other wasn't.

I'm assuming the wife would default to being able to make decisions and get whatever remains of any estate unless a will says otherwise

The partnered couple is unclear especially if there is no will. Who is responsible for the body? His parents, his children or the partner. Maybe not an issue if they all agree on a way forward but if there is diametrically opposite opinings on things who is in charge?

Again not really something that I have ever considered but maybe should be highlighted a bit more for those not wanting to commit to a marriage. Are there any advantages to not being married.

Anyway I shall pass on most of the info you good lemons have provided and hope that helps those involved.

So sad that they have gotten into this avoidable situation at such a bat time in their lives. For the price of a couple of pints or coffees, lives might be ruined. I will be highlighting this to all I know to try and prevent anyone else falling into the trap.


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