Aviva Life Insurance- is this right.

pmurray

Husband took a policy out in in 1988 originally with Commercial Union Life, then Norwich Union, now the dreaded Aviva,he pays £32.30 per month for what he thought was whole of life cover of 50K. The policy also had a saving policy attached to it that would allow us to draw down on from time to time, which we have done in the past, however we asked to withdraw some of the funds last year and we were advised that if we did so his life insurance would drop to approx 18K. My husband has MS and can no longer get life insurance, so we decided to leave it as is. Today we received a letter from Aviva stating that further to a review his life cover has been reduced to £18,423. Is this right!!!

[Deleted User]

pmurray wrote: »

Husband took a policy out in in 1988 originally with Commercial Union Life, then Norwich Union, now the dreaded Aviva,he pays £32.30 per month for what he thought was whole of life cover of 50K. The policy also had a saving policy attached to it that would allow us to draw down on from time to time, which we have done in the past, however we asked to withdraw some of the funds last year and we were advised that if we did so his life insurance would drop to approx 18K. My husband has MS and can no longer get life insurance, so we decided to leave it as is. Today we received a letter from Aviva stating that further to a review his life cover has been reduced to £18,423. Is this right!!!

Hi Pmurray

Thanks for your post. I'd like to look into this for you and hopefully answer your query. If you'd like me to do so, please send the following details for the policy holder to social@aviva.co.uk:

Full Name
Date of Birth
Postcode
Policy Number

I look forward to hearing from you soon.

Kind Regards

Stephanie
Aviva Social Media Team

pmurray

Hi,

I did as you asked and recieved a telephone call from Aviva, to state that they had no record of my complaint?? I have now given them the details of this but they say they notified my husband in July that this would happen, if this had happened in July we would have been on it. I did ask that they send me a copy of this letter, but as yet I have not received it?? I await with interest the response.

Twoblackcats

I have sent you a personal message. Hope it might be of some help.
Best wishes

kingstreet

Chances are, you have a flexible unit-linked whole life policy. These contracts were written in such a way that younger lives got lower premiums in the early years by building up the investment/savings element of the plan which was designed to subsidise the premiums later in life, when the cover was more expensive.

If you have encashed units in the plan, there is less available for future protection, so the sum assured payable on death falls, or the premium has to increase.

Plans were normally effected on;-

maximum cover (biggest sum assured, lowest premium for shortest term)

balanced cover (sum assured and premium designed to remain constant)

minimum cover (lowest sum assured, chosen premium, biggest investment) for whole term.

However, these plans relied on investment returns and they combined poor tax efficiency and high charges, so they were poor value for money.

Plan reviews were built-in, providing cover for perhaps ten years, with five-yearly reviews thereafter.

dunstonh

pmurray wrote: »

Husband took a policy out in in 1988 originally with Commercial Union Life, then Norwich Union, now the dreaded Aviva,he pays £32.30 per month for what he thought was whole of life cover of 50K. The policy also had a saving policy attached to it that would allow us to draw down on from time to time, which we have done in the past, however we asked to withdraw some of the funds last year and we were advised that if we did so his life insurance would drop to approx 18K. My husband has MS and can no longer get life insurance, so we decided to leave it as is. Today we received a letter from Aviva stating that further to a review his life cover has been reduced to £18,423. Is this right!!!

These were never viewed as savings plans. The investment element was designed to pay for increased premium costs in future. If you drew on the pot as you say, then you made it harder for the investment part to cover the increased premiums and therefore an increase in premiums was increasingly likely.

These products are obsolete by todays standards but they were common in 1988. They usually had a guaranteed period where no premiums would change in 10-15 years but then could be reviewed every x number of years later (typically every 5 years).

pmurray

Thank you for your response, this explanation is clear, however that is not what my Husbands understanding of the policy was, nor was that clearly explained to him, had it been this would have been cancelled some 20 years ago. It is little wonder they are now obsolete. Thank you for taking the time to respond.