bad advice on changing life assurance?

theresa127

Hi there

In the 1980's I took out a Freedom Policy with Guardian Royal Exchange (now Guardian) on the advice of one of their employees. At the time it was to give me income protection, as I was self employed at that time, and some life cover. The representative from GRE sold this policies mertits as 'flexible'. Later, when I married i changed the policy to life cover only for myself and my spouse, the policy also accrued some savings in the early years which could be drawn off on request.

in 2002 my marriage failed and in 2004 I had a new partner. I contacted the same Financial Adviser who had sold me the original Freedom Policy (He had remained in touch, phoning every 6 months and had over the years worked both for other 'big' Insurance companies and for himself) I specifically asked him if I should change the Freedom Policy to cover myself and my new Partner for life insurance as we had had a child together. His advice was to cash in this (whole of life) Policy as 'no one was doing them anymore' and to take out a 25year life assurance policy with his company, Legal and General. I took out the new Policy at a cost of £25 per month which gives £50.000 cover on 1st death.

After this I wondered if this was wise and asked Guardian to quote me for a change in my Freedom policy to insure me and my partner for the same £50,000, as i had 14 days cooling off with the new L&G policy. At this point Guardian lost my request and it took about 6 weeks for them to come back at me with the new quote (which was the same as the L&G policy). The cooling off period now elapsed so I continued with my new policy and cashed in the Freedom plan as advised by the L&G representative. The Freedom Policy was ended on 28 February 2005 and the savings in it paid to me.

Ever since I have regretted following this advice as surely a 'whole of life' policy, with saving attached, is better than a 25 year life assurance only one?

Please can someone advise me if I made a bad desicion to cash in this Freedom policy and if you think I was given bad advice just to get some business for this Reps new company? If it was a bad move is there anything I can do about it now?

Thanking you all in anticipation for any advice that you can offer

Theresa

dunstonh

Please can someone advise me if I made a bad desicion to cash in this Freedom policy and if you think I was given bad advice just to get some business for this Reps new company? If it was a bad move is there anything I can do about it now?

Technically, tied agents are not allowed to give advice on other companies products. How they usually get round this is by documenting that you chose to do it and that they were reacting to your request. You should check your recommendation report.

L&G have a very good whole of life contract and had he moved you into that, then that could have been the better option as that has no investment element and premiums are guaranteed, unlike Guardian. However, it may be too expensive for a tied rep (L&G products sold by L&G reps and banks are more expensive than the independent retail product).

If you only had a term need, then replacing the policy with a term assurance is acceptable. However, he would have to show there is enough reasons for the new policy being better than the old. This should be documented and given to you.

A replacement does not mean it was mis-sold. However, if the premium was the same and the sum assured was the same, then the whole of life would appear to be the better policy based on what you have said. Especially as it contained an investment element and had a value.

I would check your documentation, see how the policy cancellation was disclosed on the suitability report to see what benefits it had over the old plan and if there are no reasons or the reasons are invalid, then you should complain. If the reasons are valid, then its good advice. If there is no documentation on the cancellation, then its a rule breach and you should complain.

theresa127

Hi Dunstonh,

Thanks for your swift reply and advice.

as a matter of interest if I am unable to find the documentation can I request a copy to be sent to me from the agent or the Firm concerned, All I remember recieving is a letter of cancelation from Guardian accepting the cancelation and stating that I had not taken advice from them re cancelation.