AIG Life insurance

shajanscaria

I am a life insurance policy holder with AIG. I am paying £47 a month. I have a 20 year life cover policy with £150,000 of cover. I know it is an expensive policy. However, AIG offer a unique feature in that all of the money I pay into my policy will be returned at the end of the policy term. There will no interest added so I understand the money I have paid in will be worth considerably less in 20 years time. Recent developments with AIG are worrying and confusing for customers. Therefore can you please advise me on the following issues?
1. Will I still receive full return of monies after 20 years with the current situation? Many parts of AIG are going to be sold by the Federal Reserve – could this affect my return of monies?
2. Am I eligible for the Financial Service Compensation Scheme if AIG goes bankrupt and if so will I receive 100% of the monies that I have paid in?
3. What will happen to my life cover if AIG collapsed?
4. I have recently noticed that in the terms and conditions, they say that the premium can be increased at any time by the company. If they increased it to £100 a month, then I may not be able to afford it. In such circumstances if I cancelled the policy, would I be able to claim a refund? I am worried as my policy premiums are increasing hugely each year and according to the terms and condition any break in payments will invalidate the policy and mean I lose all monies paid in.
5. Also in terms and conditions it states that if I leave the UK for more than 6 months continuously the policy will be invalidated. The agent who sold me the policy did not mention this to me. Is there any possibility that I could cancel the policy as it has been mis-sold and claim for a refund?
After paying a lot of money to this institution over the past 4 years I am understandably nervous, as are many of my friends. I would really appreciate some advice on this matter.

dunstonh

1. Will I still receive full return of monies after 20 years with the current situation?

Yes.

Many parts of AIG are going to be sold by the Federal Reserve – could this affect my return of monies?

No.

2. Am I eligible for the Financial Service Compensation Scheme if AIG goes bankrupt and if so will I receive 100% of the monies that I have paid in?

No. You get 100% of the first £2000 and 90% of the rest with no upper limit.

3. What will happen to my life cover if AIG collapsed?

AIG would be broken up and sold to interested parties. Almost certainly another provider would buy the UK insurance arm. That may still happen.

4. I have recently noticed that in the terms and conditions, they say that the premium can be increased at any time by the company. If they increased it to £100 a month, then I may not be able to afford it. In such circumstances if I cancelled the policy, would I be able to claim a refund?

If you cancel, you break the terms and any guarnatees would cease. You would only get back the value at that time minus any penalties.

5. Also in terms and conditions it states that if I leave the UK for more than 6 months continuously the policy will be invalidated. The agent who sold me the policy did not mention this to me. Is there any possibility that I could cancel the policy as it has been mis-sold and claim for a refund?

Why would that be a mis-sale? You are not covered if you go up in a rocket to the moon either but I bet the agent didnt mention that.

After paying a lot of money to this institution over the past 4 years I am understandably nervous, as are many of my friends.

I suggest you get an IFA to review the policy and give you advice. I would be more concerned about ongoing suitability and quality of product than the remote chance that the UK insurance arm would totally fail. And a note for future reference, never buy financial products from insurance agents.