Aviva offering confusing WP endowment options

mjwraw

Hi there, just this morning received a letter from Aviva, usual stuff about how badly our WP endowment was doing and how it will be way short of the original projected value, so no surprises there. However, this letter offers two options, and says we must choose one by January 2011, or lose 'the guarantees associated with your policy'. One option is to leave the policy unchanged. The other option states:

Premium, death benefit, bonus sum assured, guaranteed maturity benefit - all remain unchanged. But Endowment Mortgage benefit will decrease from £42000 to £20627

The strange thing is that they provide an illustration for each option, and 4%, 6% and 8% projected values are identical ??? So my question is, what is the actual difference between option 1 and option 2, since both options appear to result in the same eventual payout ? Thanks

dunstonh

The strange thing is that they provide an illustration for each option, and 4%, 6% and 8% projected values are identical ???

That sometimes happens on older plans which have guaranteed minimum returns or where the projections initially take the basic sum assured plus annual bonus into account but not the final bonus and then find the projection comes in lower than the current value and gets moved upwards to match the current position.

They may also be taking into account a mortgage promise value (MEP) which has a cap on it. the 4% and 6% figure could be hit by that cap.

what is the actual difference between option 1 and option 2, since both options appear to result in the same eventual payout ?

What options are they giving you? You mentioned there are two but not what they are

sneezey_2

I think I've had a similar letter. Completely confused by it as it just didn't make sense as I couldn't tell the difference between the two options and didn't like the way it said my guarantees would be lost if I didn't reply.
I phoned Aviva this morning and they said I should disregard the letter as it had been sent in error. They said they were going to re-issue letter in a couple weeks. Give them a ring and see if they tell you the same thing.

mjwraw

Thanks for the useful updates.

@dunstonh - as far as I can see the only difference is that in option 2 Endowment Mortgage benefit will decrease from £42000 to £20627. Other than that they appear identical, which is why it's confusing - if in one option a stated benefit is being reduced, I'd expect the possible final values to be higher, since presumably some of the existing premium goes towards providing that benefit. Having said that I have absolutely no idea what Endowment Mortgage benefit is anyway ?

@sneezey - thanks for the update, my only worry now is that it's not long to the deadline stated in this letter, and knowing Aviva they won't exactly be super speedy in sending out any updates !

checkincherry

sneezey wrote: »

I think I've had a similar letter. Completely confused by it as it just didn't make sense as I couldn't tell the difference between the two options and didn't like the way it said my guarantees would be lost if I didn't reply.
I phoned Aviva this morning and they said I should disregard the letter as it had been sent in error. They said they were going to re-issue letter in a couple weeks. Give them a ring and see if they tell you the same thing.

So relieved to see that others have had this letter too. I haven't had a chance to call Aviva yet and am hoping that the call tomorrow will elicit the same response from them. I was confused, further confused and then quite angry when I received this.

The covering letter is the standard "warning - your endowment is unlikely to deliver the orignal amount". Then stuck in the same envelope, with no proper explanations are 2 options - either option 1 - cut expected covered amount to the level of 6% growth projection; option 2 do nothing + 2 forecasts and stuck in the small print ( that I suspect an awful lot of people will not even bother to read to, becasue the covering letter is identical to last years) is this veiled threat that if you don't respond before x date, then option 2 will reply and "all guarantees" will be forfeit! The implication I took is that the MEP is one of those guarantees and this was Aviva's way of limiting any MEP by turning round in 6 years and saying, "oh, you didn't reply, the MEP is forfeit"...followed by much correspondence with the Ombudsman to try and resolve.

I'll report back once I've spoken to Aviva in the morning.

mjwraw

checkincherry wrote: »

So relieved to see that others have had this letter too. I haven't had a chance to call Aviva yet and am hoping that the call tomorrow will elicit the same response from them. I was confused, further confused and then quite angry when I received this.

The covering letter is the standard "warning - your endowment is unlikely to deliver the orignal amount". Then stuck in the same envelope, with no proper explanations are 2 options - either option 1 - cut expected covered amount to the level of 6% growth projection; option 2 do nothing + 2 forecasts and stuck in the small print ( that I suspect an awful lot of people will not even bother to read to, becasue the covering letter is identical to last years) is this veiled threat that if you don't respond before x date, then option 2 will reply and "all guarantees" will be forfeit! The implication I took is that the MEP is one of those guarantees and this was Aviva's way of limiting any MEP by turning round in 6 years and saying, "oh, you didn't reply, the MEP is forfeit"...followed by much correspondence with the Ombudsman to try and resolve.

I'll report back once I've spoken to Aviva in the morning.

Hi there checkincherry - did you get any sense out of Aviva in the end ?

penwise

I am quite shocked by this. I have an AVIVA WP endowment and the MEP is important to me.

If I had been sent this letter in error I would consider asking them to send an email identifying the letter, stating it was sent in error and that I was to disregard it.

Just a thought:)

checkincherry

mjwraw wrote: »

Hi there checkincherry - did you get any sense out of Aviva in the end ?

Sorry for the delay in replying. SPoke to someone this morning. Confirms what one of the earlier posters was told:

Aviva are aware of approx. 1,400 endowment policies being affected by this "letter error". A correction letter will be sent out in a few weeks. The endowment review letter is correct. The attachments were all sent in error. I should ignore and do not need to take any action. my MEP is not in jeopardy.

However, I'm going to have to trust them to send a communication in writing. Despite my best endeavours, I can't get an email confirming this conversation (no external email links), there is no internal reference number of the error, no direct 'phone extension. I did speak to a very calm and helpful young man (Sam), who told me to use his name as a ref if there were any confusion and he promised to make a note on filke of our conversation and try and get a letter out (standard turnaround about 5 working days - so that'll get trapped nicely inChristmas rush/bank holiday downtime and snow disruption in the next couple of weeks I would guess.)

I don't think there is anything else I can do, but it was reassuing to have the problem confirmed.

Diary entry to chase up the week before Christmas if I've heard nothing by then!

dougwoof

I have just recieved the Option1 \ Option 2 letter this morning with the Endowment Mortgage benefit decrease and no other dicernible changes between option 1/2 so they are still sending them out.

Has anyone got full confirmation that ignoring this has no implications to the "Promise" or any other detrimental effect ??

checkincherry

dougwoof wrote: »

Has anyone got full confirmation that ignoring this has no implications to the "Promise" or any other detrimental effect ??

Have received letter confirming my conversation with them and that orignial review letter is valid. I assume that proper retraction letter will come in due course when they get round to issuing them.

Suggest you call them next Monday - can't understand why, if they know there is a problem, that they continue sending these letters out.

Let us know how you get on.

G51shopaholic

I've just posted regarding Aviva because we got a similar letter last week - day before Christmas Eve infact.

I was going to phone them after the New Year Holidays.

Very confusing information - our endowment only has 2 years left of the 25 to go so I'm not prepared to giveup any of the Guaranteed benefits.

What annoyed me was the statement that if you didn't reply you'd lose all the guarantees - which is what i think Aviva are trying to wiggle out of.

:money: