Endowment for funeral plan query

born2bongo

I've just lost my Dad and Mum is horrified to find her Co-op policy only covers one third of the expenses. I believe she thought it would cover everything. (Excuse the vagueness, but I'm trying not to distress her by probing too deeply so soon).

They had a policy each, which they paid into for £10 years, and completed paying in to 9 years ago (so sold to them 19 years ago). From her description, they appear to be endowments. They paid in £18 per month but Mum thinks it was £10 for Dad and £8 for her. That means Dad's policy accumulated total payments of £1200 and hers £960. She has just been told that Dad's policy will pay £1101.

I realise we can't seek compensation for poor performance, but it does sound as if they were misled. I have 2 questions:

1. Based on the limited info above, is there any chance of compensation, if I presented the right case for her?
2. Given that she hasn't much cash, but her estate would have plenty of funds to cover her funeral, is it worth her keeping her policy? If not, could we sell it as a traded policy rather than cashing it in?

Any advice will be greatly appreciated

dunstonh

1. Based on the limited info above, is there any chance of compensation, if I presented the right case for her?

on what grounds?

The term endowment covers a wide range of products so the use of the word endowment may not be wrong.

2. Given that she hasn't much cash, but her estate would have plenty of funds to cover her funeral, is it worth her keeping her policy? If not, could we sell it as a traded policy rather than cashing it in?

Not a fan of funeral expenses plans. There may be a need on first death but second death is less likely and as she has the assets to cover the cost, it doesnt really seem necessary.

That said, many whole of life plans have a point where the premiums dont need to be paid any more but the benefits are retained. If she isnt far away from that point then calling it a day may not be cost effective. So, it really depends on product as to what option is best.

Mutton_Geoff

Gosh, that is a terrible deal. If they'd simply saved that money over the same term in a building society, there would be around £5k in the account now.

Most importantly, please take time to mourn your Dad and support your Mum. I lost my Mum 4 months ago and am only just feeling confident with the paperwork issues. This can wait, so go and do what you need to for yourself and your family and revisit this in a few months when you can get what is properly owed. Good luck.

dunstonh

Gosh, that is a terrible deal. If they'd simply saved that money over the same term in a building society, there would be around £5k in the account now.

Its a life assurance. Not an investment or savings account. A lot of funeral expenses plans cease to be good value in the long term. However, these ones appear to be paid up so the life assurance benefit was probably lost at that time with just the retained investment value kept. Normally its life assurance plus investment value that is paid out. So if you stop paying in you lose that life assurance only to be left with an inefficient investment value.

clairehi

OP, sorry for your loss. I lost my dad recently too. I cant comment on the Co-op policy, but please ensure your mum makes a claim for bereavement benefits. I filled out the forms for my mum and made an appointment at the local Job Centre PLus where an advisor checked we had completed them correctly and also ran through the various benefits that mum might have been entitled to. they were very helpful and also sent off the forms through their internal mail for us.

Eligibility for bereavement benefits is complex but depending on circumstances your mum may be eligible for a one off bereavement payment of £2K (which we used to cover funeral expenses) and/or bereavement allowance which is paid on a regular basis for I think a year.

More info at
www.direct.gov.uk/en/MoneyTaxAndBenefits/BenefitsTaxCreditsAndOtherSupport/Bereaved/index.htm

born2bongo

Thanks for the post guys. Unfortunately I didn't get any answers to my questions, which were:

1. Can my mother seek compensation for mis-selling on this product (which is a life policy)? The grounds are there but is it covered by the endowment mis-selling guidelines?
2. Can she sell her policy (TEP)?
3. If not, should she cash it in?

I checked about the bereavement benefit but she is not eligible as she is over 60 and Dad had a Category A state pension benefit at the time of his death

Still hoping someone can point me in the right direction with this
TIA B2B

dunstonh

Can my mother seek compensation for mis-selling on this product (which is a life policy)?

On what grounds do you believe it was mis-sold?

The grounds are there but is it covered by the endowment mis-selling guidelines?

No its not. (i.e. they cant complain they should have had a repayment mortgage instead of a whole of life assurance policy for funeral expenses).

Can she sell her policy (TEP)?

Not if they are not endowments and they dont sound like endowments. Most funeral expenses plans are whole of life assurances. Plus you say it was paid up, so the sum assured has been wiped out.

If not, should she cash it in?

Probably if its paid up.