Permanent Health Insurance

mandingo

Hi everyone, first post, hope you can help.

I have a Permanent Health Insurance (PHI) policy with Royal & Sun Alliance (RSA) and have been claiming benefit, due to disability, since 1993 and every year I have received an increase of 7.5%of my annual income.

RSA wrote to me at the end of September'04, telling me that my income from the policy should not exceed 2/3 of my salary due to a "limitation of benefit" clause in my policy.Consequently my income from this policy has been reduced from £2230 to £1230 per month (in other wordsback to what it was in 1993) - a reduction of approx £1000 per month! with immediate effect.

Can RSA do this? I have written to them outlining my concerns, but have received no reply. What course of action can I take

mandingo

dunstonh

There are limits to what you could be paid out on these plans. It is allowed to pay out upto 60% of your salary free of tax (or 75% if it is paid by the employer but that is taxed).

Normally increasing benefit shoudnt be a problem, as long as you were within the limits at the start of the claim.

The allowances were different in 1993 compared with today. I cannot recall off hand what they were. I dont have the time to check now but if someone else hasnt posted by the time i check back later, i will look it up for you.

mandingo

DD- thanks for reply

According to RSA - "The maximum payment provided for under the policy is two thirds of weekly earnings less any other 'Relevant Income' that you receive." Your policy defines 'Relevant Income' as follows:-

'Relevant Income' means any benefits payable under any other insurance against disability by sickness or accident including benefis from your employer.

We have calculated that the max. payment that you should receive from this policy is:-

Pre-incapacity earnings (£24,297) x 2/3rds - 'Relevant Income' (Nil) x 7/365 = £310.65.

My payment according to my policy in 1992/3 was £294 per week, increasing by £22.05 per week on each policy anniversary throughout the period of assurance, both prior to and during any period of claim, after the waiting period of 13 weeks.

According to my maths : £294 + £22.05 =316.05

This would have put me above the max. 2/3rds in the "limitation of benefits" clause after the first anniversary.

Does this clarify (or muddify?)

mandingo

payless

sounds like an interesting intrepretaion on conditions-
from a company no long taking new business!

if I can find ony old RSA PHI leaflets I will read it thro!

dunstonh

R&SA (or rather the vulture, i mean venture capital company that now owns them) are reviewing long term claims to reduce them as much as they can.

mandingo

Original policy is with Sun Alliance, later taken over or merged with R&SA

dunstonh

Original policy is with Sun Alliance, later taken over or merged with R&SA

R&SA were taken over recently by Resolution life. A venture capital company. They will reduce costs to as little as possible, almost certainly move to India and pay virtually nothing on plans which have bonuses.

mandingo

The only reply I have received from RS&A simply re-states what was in the original letter ie reduction of benefit due to 'limitation of benefit' clause, with a leaflet enclosed on how to contact the Financial Ombudsman if I want to take the matter further.

I replied to RS&A asking for copies of all relevant documents eg my policy document with T & C's but have had no reply(4 weeks ago).

Any advice how to take this further or approach the Ombudsman?

Also I cannot trace the Financial Advisor who sold me the policy in 1992. I know they were taken over shortly after and hear they were taken over again but have no contacts.

How do I trace them and my relevant documents?

dunstonh

Ask R&SA for the details of the servicing agent.

DavidLaGuardia

In My opinion, If you have purchased increasing then this should remain subject to a limitation as described in the original document. However, this amount should be indexed at least with RPI, otherwise there is no point in the increase

payless

exactly - although wonder if this was just assumed in the original policy wording, and thus could be seen as a get out clause for provider