Endowment Lives Assured - from 2 to 1 - reduction in premium?

mlallen

Hi Guys

My wife has an endowment policy that started in 1992 with two lives assured. But in 1997 a Deed of Assignment was signed and submitted to the life assurance company and mortgate provider by our solicitors, to remove one of the assured lives from the policy. Both returned letters acknowledging receipt but for some reason the life company have still failed to remove one of the lives assured as detailed on the Deed of Assignment?

We are fortunately very good with our paperwork and have the original signed deed as well as letters from life company/mortgage provider. We also have all the letters submitted by the solicitor at the time requesting the life company several times to confirm that the change has been affected. The last letter from the life company was that they wanted to know if the mortgage company had any ojections to the change to the policy. Our solicitor then gained this acceptance from the mortgage provider and then submitted this to the life company. No reply was ever received even after several further promptive letters from our solicitor. We then just got fed up with pressing them and left it.

This was 1997 and now we are in 2012. The insurance company in question is Aviva which has developed from several previous guises, from Commercial Union through Norwich Union and now Aviva. It was CU in 1997.

Who do we approach to get this finally resolved - FSA or FOS? Or do we approach Aviva again and exhaust this again? I'm reluctant to employ another solicitor as this will obviously not only come with additional expense but feel that its unnecessary as its the life company's failings and negligence in administering the change.

One further query, what financial implications does this have on the policy? Presumably it is cheaper to insure one life as opposed to two? Does this mean that the monthly premium should have been reduced for this in 1997? Accept that the life assurance element is only likely to be a small proportion of the premium but we are now talking about 15yrs.

Many thanks.

opinions4u

You approach Aviva.

If, after 8 weeks, you have no joy then it's off to the FOS.

Correctly executed, the life company would have been likely to retain the premium at the same level but amend the split of premium between life assurance cost and investment. In other words a bigger maturity payout.

Given that you've known about the problem for 15 years it will be quite interesting to see how the life company or FOS handle this!

mlallen

Thanks opinions4u.

What I didn't elude to in my original post is that we haven't left this for 15yrs - was trying to gauge initial opinion and response to our problem without going into n'th degree. We have become much more complaint savvy over the years and forums like this provides great help and advice.

We have chased them on numerous occasions without any acknowledgement and their persistent failure to accept the Deed of Assignment - why is this and is this maybe deliberate considering the time? Maybe that they know that they've messed up hoping that we will just brush it under the carpet?

We had our solicitor chase them in 1998 with no response. We then chased them again in 2003 and 2004 when we moved to our current property. We chased them again in 2007 with a letter entitled 'Formal Complaint' but still no action taken on their behalf to remove one of the lives assured. This is not including the scandallous amount of phone calls we've made but have just been told that, once the policy has been taken out you can't remove the name. So what is point of having a legal document such as a Deed of Assignment? I find it a disgrace that they have persistently ignored this.

At no time have we contacted the FOS as we were unaware that this type of problem came under their remit. But we will certainly contact Aviva for the final time now and if it isn't resolved this time then we will definitely go straight to the FOS.

opinions4u wrote: »

In other words a bigger maturity payout.

We only recently thought about the financial implications with respect to the monthly premium. Logic says that if the premium is kept the same then your absolutely right that more money should have gone to investment growth. Would the FOS instruct them to retrospectively adjust our current endowment value for the 15yrs, as we have been overpaying life assurance element and the money should have been invested in the growth of the policy.

Please also see my other recent post on the forum regarding reattribution of same policy - an interesting one! Considering this and the above, do you think this too significant for us to deal with on our own with FOS help or do you feel we need to seriously consider taking legal advice?

Tescos take a minor complaint even more seriously than Aviva have about an important 25yr investment!

Many thanks.

dunstonh

At no time have we contacted the FOS as we were unaware that this type of problem came under their remit.

It may not do still as you have 3 years from being aware of the problem to raise a complaint that allows you access to the FOS. Plus, you raised a complaint in 2007 and you only get 6 months to take it to the FOS if you disagree with the outcome.

but still no action taken on their behalf to remove one of the lives assured.

When you assign the policy, it does not remove the life assured. So, is it possible it has been done but you are looking at the wrong bit?

mlallen

Thanks for the reply.

We submitted a 'Formal Complaint' in late 2007 relating to the failure to accept the Deed of Assignment. This was never responded to so does that mean that the complaint is still open?

However, please note that we stopped receiving correspondence (including statements and missing out on the reattribution - refer separate thread posted 15-04-12) from early 2008 through to only a few weeks ago! They had changed our address to our old property without our knowledge - they have admitted fault for this and offered only £50 compensation - stated that it was down to system error in transferring policy from NU to Aviva.

They received a 'Certified Copy' of the Deed of Assignment and even acknowledged receipt of it back in 1997 - we have a copy of the letter that they submitted to our solicitor confirming this. So really can't understand why this is still unresolved. We even now have the original signed Deed of Assignment as returned from our previous Mortgage Provider (which was sent to them on completion of transfer) - now with another provider.

With respect to the lives assured there is no mistake, they have confirmed there are two lives on the policy.

So if we raise a new 'Formal Complaint' as the earlier one was either ignored or not responded to, does the clock start again for involving the FOS?

Thanks.

mlallen

mlallen wrote: »

They received a 'Certified Copy' of the Deed of Assignment and even acknowledged receipt of it back in 1997 - we have a copy of the letter that they submitted to our solicitor confirming this.

They've lost it haven't they (CU) in 1997 but not admitted to it? If so, is that our problem or theirs? Not at any time have they asked for another copy - we have had to chase this ourselves - so why?

We thought that this was merely a removal of name from the policy (outside remit of FOS?) - but now find that this has financial implications to the maturity value of the policy?

Help, please!!

Annisele

A Deed of Assignment doesn't usually remove a life assured.

Say the policy started out on the lives of Mr A and Miss B. At the beginning, if one of them died the death benefit would go to the other, and the policy would cease. If neither died, then at maturity the proceeds will be paid jointly to Mr A and Miss B.

If there was a Deed of Assignment assigning the policy to Mr A, then if Mr A died the death benefit would go to his estate (and pass either according to his will or the rules of intestacy). If Miss B died, the death benefit would go to Mr A. If neither of them died, then at maturity the policy proceeds would go to Mr A.

So, the fact that there are still two lives assured doesn't necessarily mean that the firm has ignored the Deed of Assignment. Are you absolutely certain that this Deed requires the insurance company to remove the life assurance for one of the lives assured, or does it just change ownership in the normal fashion?

mlallen

Thanks Annisele - sorry in the process of editing when you replied.

The deed states 'The Assignor hereby assigns to the Assignee all their interest in and to policy of assurance on the lives of Mr A and Miss B with CU and all monies receivable or to become receivable and all benefits secured to hold to the Assignee absolutely.'

Does that answer your question? We are Miss B by the way in this post and not in your example above!

magpiecottage

mlallen wrote: »

Thanks Annisele

The deed states 'The Assignor hereby assigns to the Assignee all their interest in and to policy of assurance on the lives of Mr A and Miss B with CU and all monies receivable or to become receivable and all benefits secured to hold to the Assignee absolutely.'

Does that answer your question? We are Miss B by the way in this post and not in your example above!

That means the policy continues to cover both lives. If Mr A dies, Miss B gets the death benefit. If Miss B dies her estate gets the benefit. If the policy matures or is surrendered Miss B gets the proceeds.

The notice of assignment merely told Commercial Union that this was the case. Acknowledgement confirms they are aware. However, the risk is unaltered so the premium is too.

Commercial Union and its successors have neither done anything they should not have done nor failed to do something they should have. Indeed it is possible that removing a life assured could have resulted in a tax charge.

If anybody has done anything wrong it is your solicitor who failed to explain this to you.

Annisele

mlallen wrote: »

The deed states 'The Assignor hereby assigns to the Assignee all their interest in and to policy of assurance on the lives of Mr A and Miss B with CU and all monies receivable or to become receivable and all benefits secured to hold to the Assignee absolutely.'

That doesn't do anything to the life cover provided by the policy, it only changes the "interest" - effectively the ownership.

Removing life cover for one of the parties isn't always the right thing to do. For example, if there are children involved and Mr A was paying maintenance to Miss B, she'd likely still want some insurance on his life. In addition, removing life cover for one of the lives can make a policy "non qualifying" for tax purposes (google will tell you more than you'd ever want to know about that).

However, so far as paying for additional life cover is concerned, unless Aviva was explicitly asked to remove it I can't see that it's done anything wrong. There's nothing in the bit I've quoted that does that - did you ever send anything else asking for the insurance cover to be removed?

Edit: crossposted with Magiepiecottage - what she said!

Thrugelmir

The policy at the outset would have been written on joint life terms. So its not like your house insurance policy where cover can be amended on an annual basis.

You would have had to apply for a new policy and cancelled the old one to effect the change you desired.