LIfe Insurance Cover duplication ?

woman1

I have just discovered that my husband and I have two policies for Death or earlier critical illness benefit.

The cover was taken out to cover our mortgage in the event either of us died before the mortgage was cleared

Policy # 1 taken out in 2000 ends 2022 Cost £105 per month

Policy # 2 taken out in 2002 ends 2024 Cost £71.42 per month

I think that when we changed our mortgage in 2002 (increasing it by approx £30K) the second policy was bought to increase our cover (but from what I can understand by reading the policy documents the amounts don't tie exactly to the mortgage taken out! (?) )

My question is have we been paying out unnecessaryily?

If I need to provide further info to help give an answer please let me know - I contacted the adviser about a week ago to ask if there has been some duplication but have yet to get a reply:think:

thanks for your time

kingstreet

If the later one was written to replace the first, the first should have been cancelled when the replacement went into force.

woman1

thanks for your reply.
That was my thought initially, then I thought that it might be a 'top-up' but because the amount on the second policy appears to be for the total of the 'new' mortgage I discounted that theory.

If it transpires that it is indeed a replacement and the first should have been cancelled, what is my position ?

I am wondering if I have just squandered £8.5K?

thanks in advance for your input

stephenni1971

As an adviser I would never want to can do any existing policy. Once the new one has been set up I advise the client to do it.

Did you get a suitability letter at the time and if so how did it suggest the old policy was terminated?

woman1

Hi Stephenni1971 - thank you for your reply.

I have no correspondance other than the policy documents and the cover letters there is no mention of previous cover in the second policy and with the first policy it wasn't an issue.

I did speak with the financial adviser who set both policies up recently and asked if there was a duplication. He said no, it was a top up (as far as he could recall). I asked that he check and come back to me but he hasn't (as yet).

Could I clarify what you meant on your opening line "I would never want to can do any "

My next stop will be with the insurer however before speaking with them I hoped to get some notion as to the situation in terms of recovery of money I have spent if there is a duplication.

All input / advise is appreciated

stephenni1971

Sorry should have read cancel....

A policy should always only be cancelled by the policyholder themselves.

Therefore when I write a replacement policy I advise the clients cancel the existing policy once the new one has started - this ensures the two overlap rather than leave you uninsured for a period.

You are paying two pretty substantial premiums - from which your adviser will have earned a fair amount.

I'd want a bit more from him than an 'I'll check' and then no response.

woman1

Hi again Stephenni1971 and thank you again

I have now had the opportunity to speak with both policy providers
and my first though appears to be correct. Instead of a 'top-up' to our first policy cover the second policy covers the full amount of our 'new' mortgage.

Which effectively means we have paid out £8.5K in premiums in 10 years that we need not have.:(

The statement the financial adviser made to me when I telephoned a week ago that the second policy was just a top up cannot be proven.

Now my problem is how do I go about redressing this?

I am aware of the Financial Ombudsman Service however I am concerned that this is just going to be a situation that revolves around ...Financial Adviser claims ... told us to cancel or we elected to have both policies.


Can you give me any direction as to what the financial adviser can be expected to provide in terms of evidencing such a claim if that is the route he goes ?

(besides a clear instruction from us to the effect that we did elect to have double cover - (which we did not))

Once again any advice / guidance will be appreciated.

dunstonh

Can you give me any direction as to what the financial adviser can be expected to provide in terms of evidencing such a claim if that is the route he goes ?

Is it an IFA or an FA? Most tied agent FAs are not allowed to recommend the cancellation of existing plans. So, they put the onus firmly on you to cancel them. if its an IFA, then the IFA can recommend cancellation. However, like as stephenni has mentioned, I would expect a warning in there that you should cancel the policy only when the other is confirmed as being in force. Also, the adviser themselves cannot cancel the policy. It would require instruction from you.

My stance would be to document as a replacement and indicate the plans to cancel the other but state that you have you do the cancellation.

woman1

Hi Dunstonh, thank you for taking the time to respond.

I do understand that a policy can only be cancelled by the policy holder - the issue here is that;
I am and have been under the impression that the second policy was to cover the short fall between the first policy after taking on a new higher mortgage.

It now appears that the second policy covers the whole amount and not just the shortfall that came into being on taking out the new higher mortgage, (thus the duplication in cover) this impression was affirmed during a telephone conversation with the financial adviser.

However I have no physical evidence to support this and am trying to figure out if I just have to swallow the cost incurred by these premiums and that is what I am looking for some guidence on.

In terms of the status of the FA: I am not sure if it is merely FA or IFA

with thanks again for your time and input

Nicole1971

Sorry, this may sound like a silly question, but I also seem to have two life policies, which together add up to an amount of cover which my family would need. Can you have two policies and would both pay out? If only one policy would pay out, how would it be decided which one? I have kept an older policy , as it has a small monthly contribution and does not have as many limitations and small print as the more recent one. (That's why I have two)

Hope that makes sense