'Beware the ‘Over 50 Sun Life Axa Plan’... blog discussion 18 October 2010 at 12:13PM in Martin's blogs & appearances & MoneySavingExpert in the news 73 replies 49.7K views

Former_MSE_Lee

This is the discussion to link on the back of Martin's blog. Please read the blog first, as this discussion follows it.

Read Martin's "Beware the 'Over 50s Sun Life Axa Plan.' It often pays out less than you put in" Blog.

Please click 'post reply' to discuss below.

bigbloke45

It's a "Whole Life Non Profit" assurance which is guaranteed to pay out on death whenever that my occur, EXCEPT that it only returns premiums paid if you die before two years; this is how they are able to offer "no medical details required".

So, the old adage is "Only those that want life insurance can't buy it". The plan's no good if you are in ill health because of the two year "moritorium" on payouts and no good if you are in good health because of the low sum assured.

Michael Parkinson should be ashamed of himself! :mad:

carlislelass

thought it was after 2yrs they pay out on death? will have to look at the conditions

louise35_2

yes beware my father paid into this plan for 23 years @ 11.70 per month and when he passed away last december they paid out a paultry £880.00, he would have been better off putting his money into a building society for 23 years i was so angry will this company.

[Deleted User]

So, if we graph it...



Forget that for a laugh.

bigbloke45

carlislelass wrote: »

thought it was after 2yrs they pay out on death? will have to look at the conditions

They will pay the sum assured after 2 years. Before that it's only "return of premiums paid". This to cover them against mortally ill people effecting a policy without medical evidence. They obviously reckon that, if you can live 2 years or more, you're a good bet.

pqrdef

With Sun Life AXA, the returns aren't in direct proportion to the premiums. Very small premiums get a very poor deal, bigger premiums do better pro rata.

Other companies in the business probably do better than Sun Life AXA.

But the deal is a lot better if you start young, i.e. 50 rather than 65. Distinctly misleading of the adverts to use celebrities who are well past pension age.

Not sure it's fair to quote official life expectancies, because the policy-holders are a self-selected sample. A man who takes out life insurance at 65 has probably had a few twinges. People who expect to see 90 don't take out the policy, and this skews the customer base.

MSE_Martin

billbennett wrote: »

So, if we graph it...



Forget that for a laugh.

Nice graph but minor inaccuracy - die within the first two years, you do get a 50% uplift on what you've paid in so there is a slight upside then.

Stochasticity

If you think about it even just a little, assurance providers offer these 'whole of life' products in order to make a profit.

Yet they pay out based on something that is guaranteed to happen eventually. So if all policyholders pay their premiums until the day they die, the average policyholder HAS to be making a loss in order to create that profit for the assurance provider.

However, of course, some people with Martin's help will realise that they're getting ripped off, write off previous premiums as a sunk cost and stop paying into their plan, providing a nice little boost to Sun Life Axa's coffers that could go into underwriting a fairer payout for the smaller number that plug away paying their premiums. Or, alternatively, it could go towards paying Michael Parkinson, buying hours of TV advertising and giving away what must be thousands of free Parker pens. Or, alternatively, to bigger profits.

The trick for Sun Life Axa is to get as many people as possible paying premiums in the first place who then later discontinue their plans and thereby renounce their right to the payout upon inevitable death that those previous premiums were supposed to be buying them. Can't imagine then they'll be too worried about Martin denigrating their plans and helping a few people to with the surprisingly difficult task of rationalising the sunk costs involved.

MSE_Martin

Stochasticity wrote: »

If you think about it even just a little, assurance providers offer these 'whole of life' products in order to make a profit.

Yet they pay out based on something that is guaranteed to happen eventually. So if all policyholders pay their premiums until the day they die, the average policyholder HAS to be making a loss in order to create that profit for the assurance provider.

However, of course, some people with Martin's help will realise that they're getting ripped off, write off previous premiums as a sunk cost and stop paying into their plan, providing a nice little boost to Sun Life Axa's coffers that could go into underwriting a fairer payout for the smaller number that plug away paying their premiums. Or, alternatively, it could go towards paying Michael Parkinson, buying hours of TV advertising and giving away what must be thousands of free Parker pens. Or, alternatively, to bigger profits.

The trick for Sun Life Axa is to get as many people as possible paying premiums in the first place who then later discontinue their plans and thereby renounce their right to the payout upon inevitable death that those previous premiums were supposed to be buying them. Can't imagine then they'll be too worried about Martin denigrating their plans and helping a few people to with the surprisingly difficult task of rationalising the sunk costs involved.

Not necessarily - it could take your money and put it in more complex savings and investments to generate an income on it. So with the income on the money paid in - assuming its done right, you could afford to generate a payout beyond even the average life expectancy.

meggsy

I would personally avoid anything that has Axa Sun Life printed on it. They are not at all keen on replying to letters, emails to complaints or carrying out simple requests such as, would you please send me an encashment form