Abbey Life, Life Assurance Policies misSelling

emeralddreams

In early 90's the family bought 4 Life Assurance policies each member of the family. A few years ago my father passed away and only recently realised that the payout from Abbey Life was 1/2 the original amount.

Their excuse has been the market fluctuations. My argument has been that why doesn't the policy show increases when the markets were performing well. I pulled my policy when I saw what was happening and got less then 1/2 what I had put in. We're now seeing the same cycle with my mum and sister's policies and not sure what the best course of action would be.

I wanted to see if anyone else has had similar issues and whether their claim(s) has been successful especially if a policy has been closed early and another has been paid out upon death.

dunstonh

Their excuse has been the market fluctuations.

That is not an excuse. It is a reason.

My argument has been that why doesn't the policy show increases when the markets were performing well.

It could if the policyholder chose to do so. However, typically, the good periods would increase the investment value to allow it to average out the negative periods. Then at review points, the policyholder would choose to keep, lower or increase the cover.

Investment linked policies are old fashioned and typically obsolete and should be replaced if you can get pure term assurance at reasonable cost on guaranteed basis.

I wanted to see if anyone else has had similar issues and whether their claim(s) has been successful especially if a policy has been closed early and another has been paid out upon death.

Plenty of policies have paid out in the event of a claim. That isnt the issue. Insurers have actually lost a lot of money on these as the point up to the first review saw them carry the liability for the full sum assured even if the investment element didnt keep up with it.

ciaogatti

My parents were sold life assurance in 1984 and having been paying 20 pounds per month ever since. They have by my calculations paid at least over 7500 pounds yet their last policy value was less than half this. It is now nearly 30 years they have been paying. At the rate of inflation they would have received more in a bank account. I feel they have been totally mis sold this policy. How can this be legal? If they had put their money under the mattress it would be worth more. Can I complain to the Financial Services authority or take it to the financial ombudsmon. I know they "you may not get out what you pay in" but this is ridiculous. If i was managing these funds I would be fired!! Is there any thing that can be done or do we just accept that this is bad management of funds and market fluctuations!!

PeacefulWaters

ciaogatti wrote: »

My parents were sold life assurance in 1984 and having been paying 20 pounds per month ever since. They have by my calculations paid at least over 7500 pounds yet their last policy value was less than half this. It is now nearly 30 years they have been paying. At the rate of inflation they would have received more in a bank account. I feel they have been totally mis sold this policy. How can this be legal? If they had put their money under the mattress it would be worth more. Can I complain to the Financial Services authority or take it to the financial ombudsmon. I know they "you may not get out what you pay in" but this is ridiculous. If i was managing these funds I would be fired!! Is there any thing that can be done or do we just accept that this is bad management of funds and market fluctuations!!

The policy predates the Financial Service Act. There is no complaint route to go down.

But you say that it's a life assurance policy. My life assurance policy has no savings value. It only has a value if I die. I get nothing if I live to the end of the term.

The policy you describe has an investment value too. So the premium is paying for two things. How old are your parents? How much would it pay out if one of them died today? How much did it promise to pay out at the start of the term, when only £20 in premiums had been paid?

Think about that.

dunstonh

My parents were sold life assurance in 1984 and having been paying 20 pounds per month ever since. They have by my calculations paid at least over 7500 pounds yet their last policy value was less than half this.

I have paid house insurance for 20 years but never claimed. I am thankful for that fact too.

At the rate of inflation they would have received more in a bank account.

That has nothing to do with it. It is a life assurance. Not a savings plan.

I feel they have been totally mis sold this policy. How can this be legal?

It is legal because that is how insurance works. If you claim you get paid out. If you dont claim then you dont.

If they had put their money under the mattress it would be worth more.

You seem to be mixing up savings accounts with life assurance.

Can I complain to the Financial Services authority or take it to the financial ombudsmon.

No.

1 - The FSA no longer exists
2 - The FSA when it did exist never handled consumer complaints (it's replacement does not either)
3 - The sale predates financial services regulation.
4 - you cant use the FOS without complaining to the selling agent first. That assumes the selling agent is still around and will consider a pre-regulation complaint.

Plus, nothing you have said indicates any wrong doing.

If i was managing these funds I would be fired!

Yes you would. However, that would not be for investment performance but because you dont understand the products.

Is there any thing that can be done or do we just accept that this is bad management of funds and market fluctuations!!

Not likely to be either of these.

Life assurance policies today are different to those that were retailed in the 80s and early 90s. (Although it is still possible to get investment backed whole of life policies from a small number of providers) They used to have an investment element. The level of investment could be set at the outset. They were not savings plans and not designed to pay more than you paid into them.