Father in law life insurance rip off

fernhill178

Any advice is welcome , my father in law who is 76 , has been paying into life insurance with the same big company since 1992 . He has been paying £32 per month with the knowledge of a £12000 payout on his death. Only yesterday he recieved notice that if he wants to continue paying on the basis of getting the same payout on death he will have to start paying over £100 per month . Whats that all about ? can they do this??? Its age discrimination !!!!

[Deleted User]

This isn't really the forum for such questions, I'm afraid.
What reason does the Insurance Company give for such an enormous price hike?

fernhill178

Oh , sorry first timer here . They didn't give a reason and I belive when he questioned them , they just said take it or leave it !!! shocking if you ask me . Any idea of where I could go to some advice as to the rights and wrongs of this carry on?

amersall

Post your question here, you will get the answer you need.
http://forums.moneysavingexpert.com/forumdisplay.php?f=21

dunstonh

Its age discrimination !!!!

Life assurance is priced on age as one of the pricing indicators. Its not discrimination but a fact of life.

Whats that all about ? can they do this???

plans from that era were often investment linked. Investment returns have suffered in the 2000s with the dot.com crash, credit crunch and global recession. So, the returns have been insufficient to meet the cost of life cover. So, he has a choice to increase the premiums to keep the same sum assured, keep the premiums as they are but reduce the sum assured of if he is in good health then consider a modern life assurance contract with no investment element.

They didn't give a reason and I belive when he questioned them , they just said take it or leave it !!! shocking if you ask me .

Just because you dont understand something does not make it shocking.

Any idea of where I could go to some advice as to the rights and wrongs of this carry on?

Any local IFA.

magpiecottage

These policies were often set up on a "balanced" basis where, if certain assumptions about returns and life expectancy were met, the policy would continue at the same premium and cover for life - but it was not guaranteed

The problem that has arisen is the investment returns assumed have proven to be over optimistic - so that the fund paid for in the early years has not grown fast enough to meet the premiums in the later years (when they are more expensive).

In addition, people are having to pay premiums longer than expected because the assumptions on life expectancy were too pessimistic.

Consequently, a lot of policies cannot continue to be funded.

You can complain to whoever sold the policy (or whoever they worked for at the time). If the firm no longer exists you can also try claiming from the Financial Services Compensation Scheme.

Insurers have been known to find themselves forced to maintain cover for the same premium but it is unusual. Only where there is evidence that a Representative of the insurer told them the cover was guaranteed for life would that be likely to happen.

More common, if it was adjudged that a missale had occurred, is that a refund of premiums plus interest would be awarded. The rate of interest would depend on how FOS thought the money would have been used. If they thought it would simply have been put on deposit, then it comes to about £11,100.

If they thought something a little more speculative would have been chosen it would be around £12,500.

Of this, about £7,300 would be tax free (as it was the premium paid) and the remainder would be taxable - and might also affect age allowance.