Whole of Life Assurance

mr_n1

Hello,
I am writing this on behalf of my parents as I would like to get some advice on the following.
Currently my Dad has, “Life Plus Assurance Policy with Critical illness” from Barclays. Over the years this cover has climbed to £48,000 in total. He has had this policy for 15 years now and is paying £250 per month.
Unfortunately, this cover is now unaffordable for and he can’t sustain the monthly payments due to retirement.
After talking to Barclays, there is nothing we can do to reduce the amount of payments per month. Over the years, my dad has paid close to £25,000 pounds into this policy and upon surrendering this cover will return only £3,400.
I feel that this is ridiculous and possibly miss-sold as at the time this policy was taken out the financial implications were not drawn out clearly by the friendly Barclay home visitor.
I would like to ask the following questions please.
1. Is there anything we can do to recoup some of the costs paid into this policy?
2. Has anyone come across this type of issue on Assurance policies before? If so, what actions were taken?
3. Is this case worth investigating by the financial ombudsman?
4. Is this case worth reviewing by a financial advisor to see if costs can be recouped at all?
5. Can anyone suggest any other options are available please?

Any advice would be greatly appreciated.
Regards
Nick

ACG

How do you know the cost wasnt explained properly?
Have the premiums jumped up or are they the same now as they have been for the last 5, 10, 15 years?
If theyre the same now, then how could you argue the cost wasnt explained properly.

mr_n1

Hey,
I was reading through all the initial paper work which is very vague.
Yes the values have jumped up by around £800 every 5 years on the review date.
To me this appears to be too much - do you not agree?

Is there anything that may be done to recoupe some of the cost?

regards
Nick

ACG

Ive only been in the industry for around 5 years. 3 of them working for a life office.

Ive not really seen too much paperwork from old policies, so im not sure how they have changed over the years.

As the paperwork stands now, everything is made fairly clear if its read. I would have thought it would have some type of wording about premiums can change on the review dates periodically. It depends on the wording around that i suppose.

mr_n1

Hey,
Thanks for the reply.
I’m just looking at the documentation, my concern is that this is a “managed” product but nobody has advised on this product. It seems to me the gentleman from Barclays visited in 1995 made the assumption that, “it would not be possible to generate sufficient income at the time of existing arrangements.”

It doesn’t state anywhere the difference between “fixed term Insurance” and “Whole of Life Assurance”. My parents took out this policy thinking it would pay out on retirement.

Is there anything that can be done here as a miss sell as my parents are not originally from the UK and the documentation is a little hard to understand even for my Yorkshire born self?

Also subsequently, my father has had a heart attack, which in the documentation is listed as a “Critical Illness.” After asking Barclays regarding a payout, it was stated that they would only pay out if this illness stopped my father from working. As my father is self employed, he couldn’t afford to stop working and after a month he returned to work. Eight years later, his heart condition is forcing his to sell his business and retire early.
Is this ground for a settlement as Barclays seems to be dodging this question after speaking to 2 different advisers as well?
Regards
Nick

ACG

Managed - i would guess would be in reference to the investments.
Why would you expect the policy conditions to state the difference between 2 different policies? They give the conditions for the policy you took out - otherwise it could get confusing.

With regards to the Critical Illness - what do the policy conditions say? They tend to (now a days) say that you had to meet set criteria for a payout. I wouldnt have thought it would say "you have to be unable to work". It might be worth double checking that.

Im not sure, i dont think see a problem with being mis sold. Were 15 years down the line, this is the second review where premiums have gone. I would be surprised - but again, its down to the paperwork.

I think your best bet is to put a claim in on the Critical Illness side. See how that goes.

mr_n1

Hey,

Thanks for the advice so far.
Ill review the critical illness sections and see how a claim goes.

In terms of the amount paid in over the last 15 years or so - is there anything else that you know of that can be done to recoup some costs?

regards
nick

ACG

Honestly, i dont know.

I would doubt it but i know there are a few advisors on here with a bit more experience than me that may be able to help a little more.

dunstonh

These old investment backed plans were common years ago but largely obsolete nowadays (and have been for some time). There are only a handful left that still offer them for new business.

They are quite complicated and could double up as savings plans or life assurance as the priority or a balance in between. This is important as it affects the likely outcomes at the review points (which are typically every 5 years from year 10 or 15).

A plan with a focus on life assurance will see a higher sum assured but require greater investment returns. If focusing on investing, the life assurance sum assured will be lower. Over time, as you get older and therefore more expensive to insure, the premiums go up. However, the investment element was designed to cover that increase. Problem was that returns in the last decade have been very poor and investment returns have not been sufficient. So, the option is either to put up the premium at review or lower the sum assured.

I feel that this is ridiculous and possibly miss-sold as at the time this policy was taken out the financial implications were not drawn out clearly by the friendly Barclay home visitor.

Just because he doesnt understand it and last reviewed it 15 years ago, doesnt mean it was mis-sold.

1. Is there anything we can do to recoup some of the costs paid into this policy?

No. Not unless it was mis-sold. However, given the year it was taken out and the fact a tied insurance rep was used and nothing appears to have been wrong (as these were normal for the era), its unlikely.

2. Has anyone come across this type of issue on Assurance policies before? If so, what actions were taken?

Seen them loads of times. Seeing as they were the norm before modern level term assurances took over, you come across them all the time.

3. Is this case worth investigating by the financial ombudsman?

On what basis would there be a justifiable complaint?

4. Is this case worth reviewing by a financial advisor to see if costs can be recouped at all?

again, on what basis would an adviser use? I have put plenty of complaints in about things over the years but you have to remember that you cannot apply 2011 products and standards to decades earlier.

5. Can anyone suggest any other options are available please?

most modern options look better than these. Although there is a good chance that the quality of the critical illness cover is better than modern options.

If you bought a Austin Metro in the early 90s, you cannot complain in 2011 that it doesnt have anti-lock brakes and all the other electronic safety aids and features that modern cars have. That is what is happening here. Its a black and white TV in an HD widescreen plasma world. Doesnt mean it was mis-sold. Just mean its not past its best.

mr_n1

Hello all,
Thanks for your advice to everyone. The response times are fantastic!

I was reading through the fine print for "Critical illness” cover last night. It states that the policy pays out for heart attacks. The clause being that the company must be alerted within 8 months of this happening. This was disclosed at the time of happening, but it was stated that we couldn’t claim unless this illness stops you from working. This was stated in a phone conversation with the Assurance team. As my father is self employed, this was left.

Now it has been 8 years later, he is taking retirement at the age of 58. Although his Angina is not playing up the condition is still there and is forcing him to retire due to fatigue as the business can’t be run like it used to. And reading through the fine print there is nothing in there to state that critical illness must stop you from working.


Are there any grounds for claiming or arguing the case?

regards
Nick

ACG

Yes, ignore the 8 months.
1 - you made a claim at the time and was given wrong info.
2 - When i worked at a life office, we had a claim come in 3 years down the line. The client didnt know she had it.

So call them up, say you have been looking over their policies and you want to put a claim in. If they ask why it was so long ago (which they most likely will) tell them you called up at the time and was given wrong info. You have recently spoke with a financial advisor who has said you should be able to put in a valid claim which is why you are calling again.

Im basing all of this on what you are saying about the conditions in documents you have. But you have got nothing to lose by putting in a claim.