Premiums returned if no claim

dawragg · 26 June 2003 at 10:56AM

:)American Life are offering a variety of Policies such as Income Protection if you can't work due to accident or illness. The Policies come with a "full money back guarantee" ie all premiums will be returned at the end of the policy term - if you don't claim.
American Life are part of AIG - one of World's leading insurance & investment companies.
Is this too good to be true?

jo_b_2 · 26 August 2004 at 7:24PM

I've also been offered a life insurance policy through American Life including accident and critical illness cover in which all premiums are refunded in full at the end of the fifteen year policy.

The rates quoted are a lot lower than my current life insurance and are not affected by age, medical circumstances, lifestyle factors etc.

Is this too good to be true? What do other people think about these sorts of policies?

dunstonh · 26 August 2004 at 7:40PM

In a nutshell, yes, its too good to be true.

The level of cover on these plans is peanuts and there are significantly higher clauses on these plans.

jo_b_2 · 26 August 2004 at 9:59PM

The level of cover on the one I was offered was 100,000 which would be more than enough to cover my mortgage.

What are the clauses to look out for? Are American Life a reputable company?

dunstonh · 26 August 2004 at 11:42PM

My personal experience of American life is shoddy products sold by shoddy door to door salesman. Often very cheap but with so many get out clauses they werent worth anything.

Their income protection is a general insurance policy and not a PHI. Generically its an Accident sickness policy similar to those taken with mortgages but without the unemployment cover. It only pays out for 44 weeks but doesnt mention how long you have to wait before being able to claim. I am guessing at 8 weeks off work first to make up the full 52 weeks of the year.

The CI policy is not that extensive with regards to cover. It appears to cover the core requirements but it misses many of the extras that many mainstream insurers will also cover.

Life assurance is fairly straightforward although the terms available may not match requirements as you can only specify terms in multiples of 5 years.

Having a quick read of their other products, there is nothing there that makes them any better apart from the sales pitch about refunding premiums. However, seeing as most insurance policies do not go the full distance, its not a great benefit as you get nothing if it doesnt go the distance.

There is no mention if the premiums are guaranteed or reviewable. That usually means they are reviewable or even worse, annually set based on age.

They dont give much away on their website and the only way to get more info is to discuss with a salesman.

You mention you were offered £100k but for how long? are the premiums guaranteed? how did Legal and General, Friends Prov and Bright Grey come out as comparison?

jo_b_2 · 27 August 2004 at 4:44PM

I was offered a fifteen-year policy. What made it tempting for me was the fact that the premiums were set and not affected by ratings.

I took out Critical Illness cover last year and checked out different companies. The most competitive quote was with Scottish Provident at guaranteed rates. Unfortunately, the premium went up to £33 a month when we did take out the policy because my (ex)partner was classed as high-risk. (His father died of bowel cancer in his late thirties.)

This cover was for £75,000 on a decreasing basis (to cover mortgage.) The Am Life policy is for a fixed amount.

I've since had to cancel the policy because we've split up and I'm bringing my child up on my own. At the minute I have no life insurance cover whatsoever! As my ex is still on the mortgage I was considering taking out joint cover again, just in case anything happened to him.

To be honest, I can't afford to pay out a great deal on insurance each month as it is bottom of my priorities. I am tempted by the fact that I will get a lump sum back at the end of the term and that is why I am really considering taking out the policy.

dunstonh · 28 August 2004 at 2:46AM

To be honest, I can't afford to pay out a great deal on insurance each month as it is bottom of my priorities. I am tempted by the fact that I will get a lump sum back at the end of the term and that is why I am really considering taking out the policy.

The risk is if you dont go the distance. I cant recall the stats but its less than a quarter of life policies go the distance.

jo_b_2 · 28 August 2004 at 9:53PM

Thanks for the advice, DD. Should get some details through the post soon so will have a good look through the small print and make my mind up.

jo_b_2 · 4 September 2004 at 1:29AM

Have had the policy details through the post and decided not to go through with it. The cover was very limited and there was a clause saying that premiums could be altered with 30 days notice by the company.

Would basically be writing a blank cheque, especially as I would have to make payments for fifteen years to get my money back. Not worth it. :-/

dunstonh · 4 September 2004 at 3:34AM

Thanks for letting us know. I feared that the premiums wouldnt be guaranteed. I wouldnt be surprised if they were actually annually reviewable.

Premiums returned if no claim

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