Life cover policy- premiums treble- can I get a refund?

Cathygh

Hi
Sorry this is not ppi but it is about insurance
25 years ago I took out a life insurance policy with critical illness and disability cover of about £78k which would pay out up to the age of 70. I have just had a 5 year review and been told that I can increase my premiums from £28 per month by over 300% to £80 or leave them as they are and my cover will decrease by almost 50% or to avoid further increases I can pay £204 per month!
I have been told the surrender value is £1400. I have paid in over £9000 and been told as it is not a savings plan I am not entitled to anything. I feel like I have been conned.
I took out the policy in 1989 as my son was a baby & wanted some peace of mind if something happened to me, he is now 25 & I am thinking now I don't need this policy. I have other insurance to cover my mortgage etc.
Is there anything I can do?
Thanks
Cathy

[Deleted User]

Cathygh wrote: »

Is there anything I can do?

If you cancel the insurance everything you've so far paid in will be lost. I can't see that you have any grounds for seeking a refund either. The fact that the scheme is not value for money long-term is a matter you should have researched at the time of purchase. It was always possible that you would pay in far more than you ever got out.
It's too late now.

dunstonh

I have been told the surrender value is £1400. I have paid in over £9000 and been told as it is not a savings plan I am not entitled to anything. I feel like I have been conned.

How have you been conned?

You bought a life assurance policy that would pay out an amount if you died. You should be pleased you havent died and it hasnt had to pay out.

Unfortunately, as investment returns have not been high enough to cover the increased cost of life assurance (as you have got older) and it is not a guaranteed premium plan, the insurer can review the premium levels at a set frequency (typically along the lines of no review for the first 15 years and then every 5 years thereafter). You have hit a review point.

Is there anything I can do?

If you dont need it then get rid of it. No point paying for something no longer required and be thankful that you are still alive and the policy hasnt needed to pay out. That is how insurance works. You pay for an event which may or may not happen (and hopefully wont happen). you dont get your money back if that event does not occur. Your money goes into the pot to pay for those that have not been so lucky.

Cathygh

Thank you both for your comments.
I do not understand how any insurance policy can underperform. This is because I have dabbled in the stock market as an amateur. eg 12 years ago I bought some unit trusts. These have risen by 600% in over all value ( they obviously drop a bit when the market drops). If I can do this why can't an insurance company employing professional investors do it? They have offered me about 15% of my premiums back as the surrender value which I find a bit of an insult.


Oh yes, and for those of you who tell me how lucky I am to be alive, I have clinical depression so the matter of feeling lucky is not something I recognise and although I can't work, my insurance company won't pay out.

dunstonh

I do not understand how any insurance policy can underperform.

The investment element has a target figure to achieve to continue paying the increasingly expensive premiums (as you get older you are one year closer to death). If it fails to hit that target, the premiums go up. If it exceeds that target, the investment value is increased. Most of these plans used target rates set in the 80s when returns were much greater than today.

This is because I have dabbled in the stock market as an amateur. eg 12 years ago I bought some unit trusts. These have risen by 600% in over all value ( they obviously drop a bit when the market drops). If I can do this why can't an insurance company employing professional investors do it?

You cannot have made 600% in 12 years using conventional low to medium risk investments.

[Deleted User]

Cathygh wrote: »

although I can't work, my insurance company won't pay out.

Unfortunately, depression is not covered by your policy. That still doesn't make it mis-sold because it does still cover a multitude of other claimable conditions and events.

Cathygh

dunstonh wrote: »

You cannot have made 600% in 12 years using conventional low to medium risk investments.

Hi
I have Jupiter investments, put in 2K about 12 years ago, now worth 12K. Maybe I was just lucky, well not me, they were assigned to my son for his uni fund.

dunstonh

Cathygh wrote: »

Hi
I have Jupiter investments, put in 2K about 12 years ago, now worth 12K. Maybe I was just lucky, well not me, they were assigned to my son for his uni fund.

I just checked all jupiter funds with at least a 12 year history (exc cash fund) and the range was 75.76% to 280.2%

Not unsurprisingly, the best returns typically came from the highest risk funds but they were also the most volatile. The multi-asset funds were typically closer to the 140% range and they are closer to mainstream.