Life insurance administration con ???

simbos

I have a life insurance policy that linked as a pension (no longer available). This policy increases at the average earnings index allegedly 1.4% over the last 12 months.
However the contributions increase by 1.8%. Looking back over the years this trend inflationary trend continues:eek:. ie my contribution gets larger relative to the increase in policy benefit, Which over the 20 or so years I've had the policy seems to put me at a considerable disadvantage.
If the provider's cost / fee is a proportional to the contributions ie. "commission" how then can they justify increases over and above the natural inflation of the policy. Surely there must be some sort of control, particularly as to cancel a life policy before it is ended would be detrimental. As a new policy would cost vastly more, pro rata.
Or is this Legal Blackmail / extortion. :mad:

marathonic

This happens with the majority of index-linked products which is why I'd argue that you're better off taking out a non-indexed link product with a higher than required level of coverage at the start (with guaranteed premiums).

That way, you're paying more than you would with an index linked product at the start but more than make up the difference through lower premiums in the later portion of the term.

You'd also have higher level of coverage in the early part of the term - which can suit a lot of people due to decreasing requirement for coverage towards the end (mortgage being paid down, children getting closer to a non-dependent age, etc.)

dunstonh

If the provider's cost / fee is a proportional to the contributions ie. "commission"

its not commission.

Or is this Legal Blackmail / extortion.

its neither of those. it is was you agreed to when you took it out. An illustration giving examples of the indexation would have been supplied (probably twice - once a point of sale and once with the cancellation rights).