It’s a legal document that the bank sends to your solicitor.
It’s written in legalese, which means it’s completely impenetrable to normal people.
Also, it is clear from the language of the notes and from correspondence introduced into evidence that the policy was given to the bank to secure the note and that the bank was to have a lien on the policy for the payment of the debt.
In view of these facts it is held that the life insurance policy in question was pledged to the bank. That clause read, “Your rights and duties under this policy may not be assigned without our written consent.” The court found this unambiguously precluded an assignment.
And that’s it, fairly straightforward, ignore the bank if they try to spook you by saying it causes delays if you don’t buy from them. As I said above: it’s a type of insurance that pays off the rest of your mortgage if you die. You can buy it from the insurer directly, your bank/lender, or a broker who will usually work with all the insurers.
You also have the option of using existing Life Insurance cover (for example, if you already have a policy) as your cover.
I can also probably assume you’re a responsible adult – or at the very least, you’re very good at pretending, which as we all know: all the best people are. This one thing is either coming to you too late, or just in the nick of time, depending on whether or not you now own a house.
The banks are great for mortgages, but they’re a rip off when it comes to Mortgage Protection.
In structuring transactions, one issue that sometimes comes up is whether insurance claims, or insurance policies, can be assigned to another party.
This issue also occasionally arises in the litigation context, when a plaintiff may be willing to settle a case in exchange for the assignment of the defendant’s insurance claim with its carrier.