Life insurance

[shellac2]

What does it mean if a life insurance policy is assigned to a bank? can it be reduced or cancelled?

[factor-fiction]

Is it linked to a mortgage?

[shellac2]

Yes, factor30, it is linked to a capital repayment mortgage.

[factor-fiction]

Thanks. I'm not sure why there's a life policy for a capital repayment mortgage but- maybe it was part repayment and part endowment/interest only.
Anyway lenders sometimes wanted the policy assigning to them as security and then it would be returned to you at the end of the term. However my own lender removed the assignment part way through, and I assumed other lenders would do the same.

Is there any reason to think they might cancel it? I'm not sure what you mean by 'reduce it'

[buildersmate]

You can't cancel the policy because the mortgage company (bank) wants to be sure that in the unlikely event that you died, money would be there to pay-off the mortgage - that is why it is 'assigned to the bank. They got the master policy and you probably have a copy.

If you stop paying the premiums the life assurance company will write to you and also inform that the bank that your policy will stop. Then you can expect the bank to be on your back.