Life Insurance Question

LifeInsurance

Hi,

My friend's mum has a "Lifetime Benefit Plan" (Life Insurance) with Aviva. Her Benefit Amount is £43,445 and she pays £31.70 per month, and has done so for the past 15 years.

Last week they sent her a letter saying that if she wants to keep her Benefit amount of £43,445 she will now have to pay £79.51 per month. If she decides not to pay this amount and keeps paying £31.70 per month her Benefit Amount will be reduced to £20,366.

I'm wondering if there's any way to stop Aviva increasing her monthly charges while keeping her Benefit Amount the same, whether anyone else has had this problem and managed to come out on top, and what, if any, are her other options here?

Also, does anyone know if she can some how get any money from them and maybe get a better life insurance policy from somewhere else? What other life insurance policies would you suggest?

Thanks

kingstreet

It sounds like a flexible unit linked whole life contract sold on a maximum cover basis. The plan review has resulted in the need for a premium increase to keep the same cover, or a reduction in the cover to keep the same premium.

Such plans are now considered poor value and obsolete and are no longer sold. She should establish what value she could extract from the plan and what alternative cover would cost, perhaps a term assurance.

An IFA would be the best port of call to establish best cover, price and the correct trust to wrap it in to make it as tax efficient as possible.

dunstonh

I'm wondering if there's any way to stop Aviva increasing her monthly charges while keeping her Benefit Amount the same

No. The type of plan she has is reviewable. She would need to replace it with a new plan with guaranteed premiums (which actually may be the best option anyway if she is of good health).

The plan she has is a bit like a black and white TV in a widescreen plasma age.

jeffnail

More important is to check on the current state of health the person is at the moment - if she is ill or has suffered certain medical conditions then she may not be able to get life cover so this may be the only option available is she is now unisurable - best to get an ifa to pre u/w her first and get terms issued before she cancels this plan.

LifeInsurance

Can anyone give me a quick run through about what an IFA is and what companies are offering the best IFA life insurance?

Also, should she just phone Aviva about trying to extract whatever value she can get from her current plan?

She's a single mother in good health and all she wants is to be able to leave her daughter something.

Thanks

rs65

LifeInsurance wrote: »

Can anyone give me a quick run through about what an IFA is

http://www.unbiased.co.uk/why-use-an-adviser