Mis- sold life assurance - help!

rebray71 · 5 December 2007 at 2:10PM

Hi, Iv'e never posted before so hope I'm doing this right! Just wondered if anyone could give me advice about wether I have been mis-sold these life policies and what I should do about it if I have?

I remortgaged my house for a better deal two years ago on the advice of a company called AWD finance. (I paid them for their advice and recommendations) The mortgage is great - no probs there, But recently I was looking into my familys outgoings (I'm trying to cut back, I'm new to the money saving and trying really had to get our debts sorted) I found that we had several insurance policies - all reccomended by this comany and all with Legal and General. Obviously I had signed up to them all but did'nt have a clue what they all were or why we had them, the man just said 'I think this is what you should have' and I stupidly just said 'great - your the expert!'

So i have been looking around and comparing them and have found that we had two policies that I am concerned about: the first is Decreasing term Life assurance with critical illness cover that is costing us £70 per month. When I have shopped about I can find the same poicy even with the same company for no more that £30 max - and a lot cheaper in some other places. So why would he reccomend this policy to us when he know the reason we were re-mortgaiging was because of financial pressure - has this been mis-sold? Can I get anything back?

The second policy is almost identical to the first but its only for five years and covers us in case one of us dies or losses an income during this time. However he advised us to pay this up front by taking out extra funds on top of our mortgage - which we did about £4000. I contacted Legal and General to say I had looked at the policies and felt they were too similar to justify us keeping them both so could I cancel the one we paid up front for. They then wrote to me and said they had cancelled the policy but I was not
entitled to a refund of the premiums I had already paid. What should I do?

I know this is massively long winded but we are talking about massive sums of money that I would give my right arm to be able to get back. I know I've been stupid but do I have any comeback? Any advice would be hugely appreciated. Thanks

Zabytrid · 5 December 2007 at 2:44PM

Hi.
It does sound strange that you have been paying £70 for a Life or earlier Critical Illness policy, yet you can now get the same plan for £30. Policy premiums may have gone down, but this is a big difference, plus your age has gone up. I wonder if you were accepted on special terms on the original policy? This would mean that Legal and General assessed you medically and charged you more for the cover because of a medical condition, say 2x which would account for the increase to £70. Check your policy document to see if the policy was rated. This would explain why the quote you got was only £30, the rating would not have been taken into account in the quote.
Also, are the quotes identical? Small things like policy term, smoking status, guaranteed, renewable rates etc could all make a difference to the quoted premiums.
With regards to having 2 identical policies, one for the term of the mortgage and another for 5 years, I cannot see the purpose of this. Let's assume your mortgage is £100,000, are both of the policies for £100,000 each? If so then you have double the cover as both plans would pay out in the first 5 years if you claimed. It's not as if you could claim on the 5 year plan and then keep the 25 year plan going for future cover. Therefore, if you made it clear to the IFA that you wanted to save money, and both policies are for £100,000 each, then yes, it's been miss-sold as it's more cover than you needed and wanted. However, I don't know if you would have any comeback against the IFA - that's for one of the IFAs on the forum to talk about. Unfortunately, the insurance companies will not pay back any of the premiums because they have done nothing wrong - they are independant from the IFA who gave you the advice. Your arguement would be with the IFA who would ultimately have to give you compensation. I can also say that the IFA will have had all his commission 'clawed-back' when you cancelled the policies so he will have been hit too.
Also, I'm not sure why he would suggest you pay all the premiums for the 5 year plan is one hit?? Maybe one of the IFAs on the forum could explain this? Smacks of more commission for the IFA to me.....

dunstonh · 5 December 2007 at 2:54PM

So why would he reccomend this policy to us when he know the reason we were re-mortgaiging was because of financial pressure - has this been mis-sold? Can I get anything back?

You have not been mis-sold. You would be under far worse financial pressure if you didnt have it and had a claimable event. Indeed, had the adviser not recommended it, they would have been in trouble for not giving best advice.

Cost has nothing to do with it. You bought from a tied salesman of Legal & General. Everone knows that it costs more when you buy from an insurance company rep. The insurance company rep just has to recommend the best option from their product range. Not the best product from the whole of market place.

The only way for it to be classed as a mis-sale would be if there was no financial need. If you have a family or other dependents, you may as well give up as you clearly would have a need for it.

The second policy is almost identical to the first but its only for five years and covers us in case one of us dies or losses an income during this time. However he advised us to pay this up front by taking out extra funds on top of our mortgage - which we did about £4000. I contacted Legal and General to say I had looked at the policies and felt they were too similar to justify us keeping them both so could I cancel the one we paid up front for. They then wrote to me and said they had cancelled the policy but I was not
entitled to a refund of the premiums I had already paid. What should I do?

This is dodgy. Paying upfront like that for life cover is not uncommon on whole of life plans where it can make real financial sense for doing so. However, for payment protection it is considered bad and the FSA recently fined a firm for doing this. Take a look in the forums about payment protection and put a complaint in for this one as you could have paid for this one monthly and didnt need to borrow and pay interest on it.

So, first one is not a mis-sale. The payment protection is.

Also, next time, make sure you see an IFA or whole of market adviser. Never ever ever see an insurance company rep.

Therefore, if you made it clear to the IFA that you wanted to save money...
...Maybe one of the IFAs on the forum could explain this? Smacks of more commission for the IFA to me.....

Just to confirm, the OP didnt see an IFA. He saw a tied rep of legal and general. That would be about £20 of the price difference straight away. So, your comments about IFAs and insurance companies are not correct in this case. The salesperson represented the insurance company.

Zabytrid · 5 December 2007 at 3:28PM

Beg your pardon, I was not aware AWD were linked to L&G.

In that case, yes ignore my comments re IFAs.

Mis- sold life assurance - help!

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