Barclays Life Stages Policy

GDS1967

In 1997 my wife and I took out a life stages policy with Barclays for 137,000 on the event of death. At this point we were aged 29 and 26. The policy started off at 20 pound per month and we were informed that the premium would increase by approx 1 pound per year which it has done and is currently at 36.00 per month. In November we were notified that the policy was taken over by ReAssure and that this would not affect our policy. We have recently received a letter stating that if we wish to keep our pay out at 137,000 then our premiums will have to increase to 212.28 per month. We are absolutely astounded by the increase in premium and cannot believe that ReAssure can increase the premium by so much. We can continue to pay 36 pound per month but the pay out in the event of a death would reduce to 26,800. Could anyone provide advice please as this does not seem fair to us. Thank you.

ACG

What do your policy documents say?
Presumably it says the premiums are reviewable, does it give a maximum that the premiums will go up by? If not then i think you may need to look elsewhere.

To be honest though, even a premium of half that is extremelly expensive for life cover - i would presume it has critical illness built into it?
I would go and see a mortgage or financial advisor, they will be able to get you a better deal than a bank.

GDS1967

Thank you for your reply. The policy states that "the premiums will increase each year by the amount required to secure the increase in the sum assured. This will not be less than the retail price index".

The policy does not have critical illness and we are both non smokers.

It just seems very odd that it has increased so much since ReAssure took over the policy.

ACG

It seems strange that they would buy a book of policies and do something that would basically result in a lot of cancelations :S

If you are both in good health i would get the policy looked at (ive just re-read your post and thought you were in your 20s sorry my mistake), it still seems expensive put not by as much as i originally thought.

dunstonh

Could anyone provide advice please as this does not seem fair to us.

The policy has a range of set terms and providers have to act within them.

Does the plan have an investment element?
Are the premiums reviewable? (you havent answered this one yet - its a key question)
If they are, when is the first review point (typically its 10 years or 15 years)?

It just seems very odd that it has increased so much since ReAssure took over the policy.

My gut would be that its come up to year 15 review point on reviewable premiums and that is why it has increased.

It seems strange that they would buy a book of policies and do something that would basically result in a lot of cancelations :S

They dont buy individual plans. They bought the whole book.

ACG

dunstonh wrote: »

They dont buy individual plans. They bought the whole book.

Thats what i said :P
It would seem strange that they would buy a book of policies then increase the premiums massively so everyone cancelled.

kingstreet

I'm with dunston. The issue of the new owner is a red-herring IMHO. I suspect this is a reviewable whole life policy with an investment element. The plan has reached a natural review point in its life cycle and it may well be the cost of cover for the current ages of the lives assured and the lack of a decent investment return in the past (and possibly projected into the future) means the current sum assured simply can't be sustained.

£137k life cover for a couple aged 44 and 41 should be a lot cheaper than the figure quoted, but don't forget it's likely the plan is being costed to build up a surplus to meet future costs in preparation for the next review, which may be as little as 5 years away.

One of the problems of such plans being arranged on "maximum cover" is the storing up of problems later when the review hits hard in circumstances similar to those of the OP.

I would suggest reviewing the current and future need for life cover against the plan review options, with an IFA.

dunstonh

Thats what i said :P
It would seem strange that they would buy a book of policies then increase the premiums massively so everyone cancelled.

This is just one type of plan though. They have decades, indeed, generations of different types of life and pension policies as well. These types of policies are rare nowadays having not been retailed in the mainstream for well over a decade. So, in reality they will only form a small part of the book. Plus, the book would have been bought a lot cheaper than its overall net value (assuming policies stayed to the end) - sorry if I sound like I am teaching you to suck eggs. Its mainly for the benefit of others reading rather than you.

One of the problems of such plans being arranged on "maximum cover" is the storing up of problems later when the review hits hard in circumstances similar to those of the OP.

The flipside is that for 15 years the insurer has probably made little or even a loss on the policy as the premiums were cheaper than they should have been had the review point been placed earlier. So, getting it cheaper for 15 years and now moving to a modern plan may end up being a very good thing.

GDS1967

Thank you for all your advice. Yes the premiums are reviewable but the Barclays Financial Adviser who sold us the policy informed us that it would not go up a lot each year. Thank you for your comments I think we will look elsewhere for insurance as we are not going to pay 212.00 per month for insurance. This figure is a 580% increase in the premium. Thanks again for your comments.

dunstonh

Yes the premiums are reviewable but the Barclays Financial Adviser who sold us the policy informed us that it would not go up a lot each year.

That was before the dot.com crash followed by the credit crunch and global recession. Drops on that scale happen once every 25-30 years. We have had two in 10 years.