Endowment saving with life insurance

kwakamike

I have 3 endowment saving policies with life insurance connected but these are not connected to our mortgage.

I have been told that i could claim on these policies with a reason that there were more suitable products on the market at the time and the fact that I didn't need life insurance cover as my work covers me for 4 times my salary.

What I'd like to know is, could I have a claim even though they were sold from an advisor at my work (one with CGU as they were and one from Standard life) and one I started from seeing an advert in the paper (axa life). First 2 started in 2002 due to mature in 2017 and the other in 2000 due to mature in 2015.

Any comments or advice

holly_hobby

If they are Low Cost Endowments i.e used in connection with a mortgage - then yes they are not ideally suitable as savings vehicles or for future house purchase.

If they are full endowments (traditionally used as savings plans) - then they were perfectly suitable savings vehicles.

You say that you don't require the life element of the policy, so therefore believe on that sole basis that there were other more suitable regular savings vehicles that should have been presented to you i.e those without the inclusion of life cover (that you state was not a requirement).

Thats as may be or may not be correct depending on many personal and financial factors.

However, the main point to consider is that the proceeds of your policy at maturity (subject to conditions) will be paid tax free, due to the policy qualifying status (which I presume was an attractive aspect of the policy terms). One of the main aspects of a qualilfying policy, along with regular premiums, is the required of the policy to provide life cover equivalent to 75% of the total premiums paid over the term.

The fact you did not require life cover, which is included in a qualifying savings policy, I don't believe wholly constitues a mis-selling claim for the CGU or SL polcies (if they were not purchased as staff, under an execution only basis as was the Axa plan). But that the tax benefits of the inclusion out weights any part of premium that funded the life cover aspect - plus any benefit you recieved as a staff member for effecting the CGU & SL policies, such as return of commission, discounted prems etc.

If you wanted a non-qualifying policy, then you would be looking largely at asset backed investment vehicles, such as bonds (albeit with the offer of a Unitised With Profit fund), unit trusts etc - which of course may not have been suitable to your risk profile. (asset backed investments having a minimum of a balanced ATR - where your purchase of endowments suggests to me a cautious ATR).

This is different to LCE sales, where the requirement of life cover is considered as part of the renumeratino process - with complaints largely assessed on a completely different set of critera - which is where I think you have the got the idea that incorporated life cover constitues a mis-sale across the board.


Hope this helps

Holly

kwakamike

Thanks Holly,

That was pretty much what I thought too. They are full endowments with profits savings not linked to any mortgage.

They shall run their course and hopefully produce a nice little nest egg..

Thanks once again

dunstonh

I have been told that i could claim on these policies with a reason that there were more suitable products on the market at the time and the fact that I didn't need life insurance cover as my work covers me for 4 times my salary.

Did you buy them from a tied agent or an independent?

Tied agents are only authorised to give you what they have to offer. They cannot give you best on the market. An independent does research to support their recommendation. So, how is somone who hasnt got access to the information you have able to tell you that you have a reason for complaint when either distribution channel should have this covered?

The death in service of 4 times salary has never been required to factor in to mortgage debt repayment. It has been easily justified as excluded as it is a discretionary payment that may not go where you expect and its primary purpose is to make up for lost income and pension provision.

What I'd like to know is, could I have a claim even though they were sold from an advisor at my work (one with CGU as they were and one from Standard life) and one I started from seeing an advert in the paper (axa life).

The AXA one through the paper you bought. No advice given so you cannot complain. If the standard life and CGU plans were bought through a tied agent then most of your complaint is irrelevent.

hey are full endowments with profits savings not linked to any mortgage.

In which case, the life assurance element is part of the product by law. It cannot be removed. A regular contribution ISA may well have been better but only if the adviser had one available. Tied agents very often did not. Or the minimum premium was £100pm. Anything under £100 would be catered by the endowments.


Did you actually take these out on advice? 2002 seems very late to start endowments. Most advisers had stopped by around 1998. It was really only the direct marketing cases that were still offering them by then