Queries re: PPI and also Critical Illness policies

sickwithworry

Hi,

Please can anyone advise...

In 2001, I took out Income Protection Insurance to protect mortgage payments if I became seriously ill, or made redundant.

I was told that the fixed monthly premium was £33 for the duration of the policy. They NEVER advised that in the event of my being ill and unable to work, that they would NOT pay out, as my employers pay sickpay - full rate of pay for 6 months, then a further 6 months of half pay.

The company concerned, recently sent a letter about the monthly premium. Apparently, for the past 12 months, I have been charged £44 a month for the cover, but it is now reducing back down - but only to £35 pm, not the £33 originally quoted.

I feel that they should have explained clearly, that in the event of illness, they would not pay out if you were covered by your employers Sick pay terms. (I still have the policy Statement of Cover - it does NOT mention anything about this).

Can anyone please advice - Is there a possibility that I could claim that the policy was mis-sold ?

ALSO - I took out critical illness cover approx. 15 years ago. The premium was fixed for 10 years at £35 per month, afterwhich there would be "periodic reviews" where the premium may increase slightly.

I was mortified, when 10 years later, the insurance co. wrote to advise that the premium was being DOUBLED ! But because of being 10 years older, I was worried that if I cancelled the policy, I may not be accepted by any different co. due to my age, etc.

Unfortunately, the "periodic review" has since 5 years ago, now been reviewed EVERY year. I am now paying TREBLE the original premium, which I am stuggling to afford.

Should they (or the broker) have clearly informed me at the outset, that after 10 years, the premium could go up massively?

This year, when it was reviewed again, I could not afford to pay the increase, and have had to opt for REDUCED cover instead.

To date, I calculate that I have paid well over £10,000 in premiums.

I was totally honest when applying for the policy, re: my health, etc., but I now worry that If I did fall critically ill, and they refused to pay out any claim, that I would loose all the premiums paid.

If life insurers, etc., DO refuse to pay out a claim, do they reimburse the policyholder with all the premiums paid?

Sorry for the length of this - will be grateful for any advice please

Many thanks

stephenni1971

I took out critical illness cover approx. 15 years ago. The premium was fixed for 10 years at £35 per month, afterwhich there would be "periodic reviews" where the premium may increase slightly.

My bold

Standard terms for a reviewable policy - though the amount of increase is unknown at outset, so concerned if you were told slight increase.

Unfortunately, the "periodic review" has since 5 years ago, now been reviewed EVERY year.

Standard terms again, for a reviewable policy.

Should they (or the broker) have clearly informed me at the outset, that after 10 years, the premium could go up massively?

They will certainly have told you premiums would be reviewed. Will be on your letters from broker and also the insurers policy documents. Thats the problem with this type of policy, cheap at start up but over time gets expensive just when you need it most.

This year, when it was reviewed again, I could not afford to pay the increase, and have had to opt for REDUCED cover instead.

No different than a lot of other people have had to do.

To date, I calculate that I have paid well over £10,000 in premiums.

Totally irrelevant. You have paid money and had cover over the period.

I was totally honest when applying for the policy, re: my health, etc., but I now worry that If I did fall critically ill, and they refused to pay out any claim, that I would loose all the premiums paid.

Why would they not pay out?

If life insurers, etc., DO refuse to pay out a claim, do they reimburse the policyholder with all the premiums paid?

In most circumstances absolutely not. Only time I have seen it is if there were issues around non disclosure where they would not have offered cover in the first place.


What age are you now? You may still be able to get cover with guaranteed premiums if you look.

As it is your existing policy will only ever increase in cost, but you may have no other option than keep it.

Speak to an IFA

OshayAway

Is this definitely reviewable or is it renewable?

dunstonh

The CI policy seems fine and correct for a reviewable or renewable plan. Obviously a guaranteed plan would have been better but would have been more expensive from the start and the distribution channel you bought from may not have had a guaranteed plan (if not independent).

The PPI would not pay out in the first 6 months but would pay a bit for the next 6 months. If its an MPPI (rather than a PPI) then as long as the insurer pays directly to the lender then its not included in income for offsetting against the maximum allowable. If its PHI rather than PPI or MPPI then the term will go on until your selected end age (typically 60-65).

sickwithworry

Many thanks for the replies. I will try to keep this brief !

Stephen - you asked "Why would they not pay out?" (Regarding CI policy).

Just me, hopefully unnecessarily worrying... As I said, the CI Pol. was taken out 15 years ago, during my earlyish thirties. I do remember the Insurers applied for a Medical Report from my GP, at the time. Which must have been ok, as they did cover me on "standard" terms.

I had never had any serious health problems, and was not aware of any "inherited" health conditions. But, 10 years ago, my eldest brother, aged just 44, suffered a heart attack. He was eventually told that it had been caused by extremely high chlorestol levels. (He was 10 years older than myself.)

Then, 8 years ago, my second brother, ALSO at the age of 44, also suffered a heart attack - again due to high chloresterol levels, etc.

It was suggested by Dr's, that he should contact any siblings, to advise them to have their chloresterol levels, regularly checked - he was told he had something called "familial hypercholesterolaemia" (?) as well as extremely high blood pressure.

So, after his advice, I myself had tests done, which showed that I too, had dangerously high cholesterol levels, and extremely high blood pressure. So for the past several years, I have been prescribed with 2 different medications - one for the cholesterol, and the other for high BP, which luckily controls the conditions.

5 years ago, I was also diagnosed with Sleep Apnea, which again I knew nothing about, and had not suffered any symptoms until 5 years ago. (Luckily though, this is now also under control, as for the past 5 years, I have had to wear a CPAP machine at night-time, which keeps the airway open)

I am just worried that the life and CI insurances, which have been taken out over 15 years ago, (I also have Life Insurance to cover my mortgage debt, should anything happen) will not pay out, if a claim was ever made, because I did NOT know, 15 years ago, of the above inherited conditions.

I read recently of one case where a man had been killed in an horrific RTA. His widow claimed on his life insurance, BUT THEY REFUSED the claim, because he had not divulged some ailment, from years ago - which had absoloutely nothing to do with the RTA...

Anyway, thanks for your interest and advice.

many thanks & kind regards
SWW

OshayAway

Yes, you are worrying unnecessarily. Any changes in your family medical history that occur after the policy start date are irrelevant.