Raising premiums not your fault

tonyfox9

in 1988 i took out a whole of life policy so that when either me or my wife dies they will have some m0oney to cushion the blow.the initial payments were £31.25 per month and we were to receive £56270 . after 23 years of never missing a payment i get a letter telling me that due to an error PHOENIX have not carried out any reviews and will be putting up my premiums to £105.56 per month this is something I could do without any help please

dunstonh

after 23 years of never missing a payment i get a letter telling me that due to an error PHOENIX have not carried out any reviews and will be putting up my premiums to £105.56 per month this is something I could do without any help please

The error has actually made you financially better off. So, whilst no-one likes an error, its better when you have gained out of it.

Whole of life plans from the 80s had reviewable premiums. This meant that at certain review points, they could assess the investments and see if they were sufficient to meet the cost of life assurance. With 60s,70s and 80s levels of returns, they would have been. However, the 90s and mostly the 2000s have seen dire investment returns (in the areas they invested in). So, the returns have not been sufficient to pay for the life assurance. So, when you hit a review point they ask if you want to increase the premium or reduce the sum assured (or a bit of both).

Investment whole of life plans still exist today but you can get guaranteed premiums and you can now get non-investment linked whole of life plans. So, you may wish to investigate switching if you can. Or you may find that you no longer have a whole of life need and a level term assurance may be more suitable.

vaio

If they can come and increase your premiums because of the current poor investment returns does that mean that in the boom years premiums got reduced or does the “heads I win, tails you lose” rule apply?

mikey72

If you weren't aware they could raise you premiums, get advice for mis-selling at the very least.
Also because of the error, are they now backdating the correction, by tripling the premium.
You need more advice on your specific circumstances than an internet forum can provide.

dunstonh

If they can come and increase your premiums because of the current poor investment returns does that mean that in the boom years premiums got reduced or does the “heads I win, tails you lose” rule apply?

The premiums could be reduced or they could remain in the investment pot or withdrawn if you wanted.

If you weren't aware they could raise you premiums, get advice for mis-selling at the very least.

Proving it would be nigh on impossible. It would have been in the policy terms and 1988 rules would have applied (which are closer to no rules compared to today). Plus, there is nothing at all wrong with what is being done. Its just a delayed reaction to what should have occurred in year 10 or 15 or 20.

Also because of the error, are they now backdating the correction, by tripling the premium.

I read it that they were not backdating but doing it from that point onwards (which is the normal way). Phoenix have been very good at picking up errors made by the insurance company products they have bought. Normally when they find things like this (which are surprisingly common), they dont backdate. Indeed, they wouldnt get away with it.