Lifetime Security Plan Scottish Widows

garys_missus

Hi all, firstly apologies if this is in the wrong place.
I don't really know how to start to explain myself on this subject as it is quite long winded, but here goes.
Quite a few years ago, my parents started paying into this Lifetime Security plan with TSB which went on to become Scottish Widows. The original monthly premium was in the region of £15 which guaranteed them a lump sum to be paid into their estate on the death of the remaining parent. A number of years passed when Scottish Widows increased the premium to somewhere in the region of £30 per month, they then came to the conclusion that they were no longer in a position to pay this, and asked me if I would like to take over the payments, and on their death I would be liable for all buriel costs and would be eligable for any excess due, on top of my share of their estate. I took this over about 15 years ago. During this time the premium was again increased to £66 per month. I have now received a letter from them stating that the premium is to be increased again, but this time it is to go up to £262.50 per month :eek:. If I do not want to pay this increase, and remain on the current payment of £66 then the amount payable on the death of my last parent would drop by almost £40,000. I must admit to being more than slightly shell shocked!
I really don't know what to do. I'm guessing I have no redress?
This new amount would take roughly 1/4 of my monthly wage (which varies due to my working for an agency). On the other hand, I'm pretty sure that we have paid in excess of the amount being offered as settlement if I chose to remain on the current payment.
If anybody has any ideas or comments I would be more than gratefull to hear from you.
However, I will be away for 2 weeks from tomorrow, so apologise in advance if I do not respond during that time.
Thanks for reading, even if you can't help.
Deb

dunstonh

Lifetime security plan if I recall correctly was a Black Horse Life whole of life assurance product. Its old and obsolete by todays standards but normal for the period.

If your parents are in good health it may be worth looking at a modern alternative that is not investment linked and doesnt review premiums every 5 years. If they are not in good health then you have a choice. Reduce the premium and the sum assured or pay it or find something in betweeen.

I'm guessing I have no redress?

If it was mis-sold then maybe. However, this plans rely on investment returns and investment returns took a double hammer blow with the dot.com crash and global recession/credit crunch. Plus, the low inflation environment hit these plans hard as well as they were geared and worked well in a high inflation, boom/bust economy that he UK had been in for decades previous to them purchasing it. It was a policy for its time but that time has long since gone and they have been largely obsolete for about 15 years now. Its a shame you didnt review this with an IFA earlier as it may be too late now. Their age and health will dictate that though.

garys_missus

Just a quick update. I phoned Scottish Widows to try and find out how they had come to such a huge increase. I have been told that they will look into it and write to me and let me know.
Just out of curiosity, I asked if this policy had a surrender value, and was told that it did.
Now, after speaking to my Dad and finding out that he had taken this out over 30 years ago, and my current payments are in the region of £786 a year, what do you think they are offering as settlement???
£572
:rotfl:
Well that was my spontanious laugh for the day.

dunstonh

Now, after speaking to my Dad and finding out that he had taken this out over 30 years ago, and my current payments are in the region of £786 a year, what do you think they are offering as settlement???
£572

Figure seems about right. If it was higher then they wouldnt need to increase the premiums. It is quite probable at some point in that term, the value would be much higher. I am not sure the plan has been around 30 years. As I said, it was a Black Horse Life product and Black Horse Life were retailing this through Lloyds Bank branches in the late 80s to mid 90s. It may have gone back longer but I didnt think Black Horse Life started retailing until 1988.

Well that was my spontanious laugh for the day.

Why? It is not an investment or savings plan. You could almost call the investment element a cash float that is used to pay the premiums. If it was an investment product