Countrywide Assurance Lifetime Plan

awildanimal

Hi

I'm new here but I thought I'd just ask for opinions about this before taking things further.

14 years ago I took out a new £60K mortage and arranged a Lifetime Protection Plan with Countrywide Assured, including Income Protection Benefit, Critical Illness Benefit and Death Benefit (to cover my new mortgage). The monthly premium at the time was about £60.

It was explained to me at the time that this was a 'savings plan' as well and that it would accumulate value over time, although in the early years it would probably have zero value. Initially, my statements showed that every year the cost of administering it exceeded the value of the plan but this gradually changed and by last year it was showing a value of approx £3.5K.

By then the monthly premiums had increased to something like £260. The Benefits had also increased every year and the Death Benefit was then approx £118K. (I had remortgaged a couple of times and the new amount was £130K - the £12K difference in cover was made up by a small policy elsewhere).

By Summer 2009, having gotten myself in deep financial doo-doo, I was looking to cut costs and spoke to CW about 1) changing the level of cover and 2) cashing in some of the value.

I wanted to drop all benefits except the Death Benefit, keeping it at £118K and cash in about £3.3K of the current value. I was assured there was no problem with any of this and it was all do-able. The new premium would be around £49 which was a big saving.

On 3rd August I received confirmation of the proposed changes showing the policy details before and after the change. All looked fine - premium and benefit confirmed at £49 and £118K.

On 26th October I received a letter confirming the changes to the policy had been made and I now had "the benefits and level of cover you requested". Also enclosed was an Endorsement for the Plan dated 31st October confirming the only remaining benefit for death was £118K and the new premium was £49.

On 26th October I received an advance notice of DD for £49 starting on 6th November.

On 28th October I received a letter confirming that the partial surrender of the policy was going ahead and that the amount (£3.3K) would be transferred to my account in 3-4 days.

On 17th December I received another advance notice of DD for £49 due on 7th January 2010.

On 2nd June 2010, I received notice of my Lifetime Protection Plan Annual Review and that the policy had "passed the premium review" and confirmed the new premium DD from July 2010 would be £51. BUT, the statement with the letter also listed the current Death Benefit as £8K... not £118K but £8K!

I assumed this was some kind of simple mistake. After all, no-one had said anything about reducing the Death Benefit. After phoning CW, it seems the partial surrender of the policy value has the effect of reducing the benefit proportionaly but no-one had ever mentioned that this would happen. Nothing on the phone and nothing in writing.

I lodged a complaint because that is apparently the best way to ensure that a detailed investigation is carried out, including reviewing phone calls. They said they have to respond within 48 hours, but that was yeaterday and no response.

Reading the small print now I can see that there's a statement about partial surrender and proportional reduction in benefits but, as I say, this was never made clear to me at any point. This is crazy - I would never have surrendered anything if I'd known it would affect my death benefit! And £50 a month for a benefit of £8K - how ridiculous is that?

I'm still waiting to hear back from them but, obviously I'm now seriously worried. I commute by motorbike and have had a few accidents in my time and been very lucky not to have been killed on at least one occasion. I'm just very aware that if I died now, on the face of it, the payout would only be £8K. nowhere near enough to clear the mortgage.

Does anyone have any views, opinions or similar experiences? What should I do next?

Thanks for reading.

dunstonh

I lodged a complaint because that is apparently the best way to ensure that a detailed investigation is carried out, including reviewing phone calls. They said they have to respond within 48 hours, but that was yeaterday and no response.

48 hours by post. They then have 8 weeks to investigate.

And £50 a month for a benefit of £8K - how ridiculous is that?

Its not ridiculous. If you have the cover set to minimum life assurance with a greater investment element then you would expect a lower sum assured.

Reading the small print now I can see that there's a statement about partial surrender and proportional reduction in benefits but, as I say, this was never made clear to me at any point. This is crazy - I would never have surrendered anything if I'd known it would affect my death benefit!

They will only act on what they are told. They are not there to provide advice on potential issues that may or may not occur. That is the role of your financial adviser. Did you seek financial advice before making the changes or did you just ask the insurer to make the changes?

Does anyone have any views, opinions or similar experiences? What should I do next?

May be a blessing in disguise. These plans are woefully obsolete (even 14 years ago). A move to a modern alternative may well be much better value for money. Although modern CI plans dont tend to have the coverage of older CI plans. However, a more comprehensive CI plan could make up for that (i.e. dont shop on price but on quality).