Life & critical illness policy help please

nicky1974_2

Sorry long windede but help would be appreciated ... i took out a lifestyle plus premier joint life cover in sept 2002 it gave us 78,375 cover for 10 years the 24,426 thereafter for 50.85 per month with allied dunbar this was because we moved to a bigger morgage and has a policy wih another company for 32 thousand but new morgage was 100 thou so needed more life ins we were advised by a financial adviser to just take out the above then we'd have the 2 policys which together would cover us if anything were to happen and that was ok with us our fixed morgage is due up this dec so i have just been checking my policy to make sure all up to date and havnt rec any paperwork from allied dunbar for a long long time so have contacted them to discover my policy now with zurich and they have my old address not where i am now i have lived at my new address dec 2002 this prob was my fault my b i didnt give them new address..... anyway they tell me my policy is worth 30.000 not the 78,375 that i took out i nearly died on the spot they say they advised me of the reduction but obviosly i havent rec anything from them prob beacuse i moved. My paperwork shows the higher payout for 10 years (as above) and the policy is not yet 10 years old i cant understand how it can have dropped SOOO much because my payment to them has stayed the same !! ive raked through my paperwork and it does say in tems that it can change the amount and they can review it after 5yrs and then i think again after another 5 years but surley this amount in drop is mad so we are currently not covered if anything happens to one of us as the 2 policys together only add up to approx 62 thous .. zurich say the sent me a copy of the letter saying re the reduction on the 30th sept but im still waiting for it ... has anyone had similar probs ?? any advise please

dunstonh

but surley this amount in drop is mad

No. Its understandable.

Allied Dunbar (AD) sold investment backed plans with a target growth rate and reviewable points every 5 years. If the growth rate was achieved, the premiums remained the same. If it fell short the premiums would rise (or the cover would reduce depending on your choice at the review point). In the last 10 years we have had two 45% stockmarket crashes. You tend to only get one of that size once every 20 years. So, to get two in 10 years is very unsual. It has basically meant investment returns have not been sufficient to meet the increased cost in life assurance, hence premiums rise or cover reduces. The degree of rise/reduction depends on the target growth rate used and the level of premium allocated to the investment amount.

These products have been obsolete for a long time. Indeed, they were really obsolete in the mid 90s. However, AD kept on selling them until they closed down. They didnt offer pure term assurance and as tied sales rep of the insurance company, they only have to offer the best product in their range. not best product out there (you need an IFA for that). Their product range was expensive, old fashioned and obsolete but as they are tied agents, they could get away with it.

Typically, you would look to rebroker the policy using a modern pure level term assurance or decreasing term assurance or family income benefit (depending on need). That assumes your health is good enough to allow that.

we were advised by a financial adviser to just take out the above then we'd have the 2 policys which together would cover us if anything were to happen

Tied agents are usually not allowed to recommend cancellation of old plans, even if the old plan is obsolete. So, the FA you saw acted within their remit. An IFA would have told you back then that the policy was obsolete and sorted it for you then. Its one of the differences between an FA and IFA.

lisyloo

I would suggest you get an IFA to sort this out.
You can see the level of expertise they have above.

It sound like you went with a tied advisor last time and not an independent one.

I would also start putting together a list of all the companies you deal with. That time it should be easy to change your address in future.
You've lost out financially by not being kept informed so I would start writing that list and keeping it up to date.

nicky1974_2

Thanks for that info i will deff be keeping a check on policys in the future and not leaving it so long i will be cancelling this one at 50.85 a month and putting it down to my in expierence and incompitance as if i had of realised it had decreased so much would have canceled it a long time ago i just feel like i have been putting 50.00 down the toilet every month and so annoyeed with myself .. lesson learnt the hard way im guna contact zurich now to cancel and just take out a life insurance that covers our morgage in the event of death .. dont have a financial adviser the one we used before was a rep of zurich marketing group


Thanks
Nicky x

dunstonh

dont have a financial adviser the one we used before was a rep of zurich marketing group

Which explains why they didnt tell you to cancel the old plan. Dont use FAs. If you need advice, use IFAs.