Life Insurance sum assured in old money - help!!

tinajaynens

Hi All, I'm new to the site and hoping someone can help please?

My Dad recently passed away leaving a tiny life insurance that Mum was hoping would at least cover the funeral costs. The policy was with Liverpool Victoria and became a free policy in November 2012. We have the original policy schedule which states a sum assured of £298 and 16 shillings. LV have offered mum £2667, which we think is too low, as various old-to-new money calculators value the sum assured as anything between £3500 and £5400.

Does anyone know please how LV would have calculated their offer, as we want to negotiate something better. Or is there anyone out there with a similar experience?
Thanks in advance!!

dzug1

The old to new money calculators aren't really relevant - they will be based on various assumptions as to inflation, wages and the cost of living.


LV's calculation will be based on their own interest rates - likely to be low - less their expenses and a deduction for the life insurance element - likely to be high in relation to the small sums involved


TBH this type of policy - whoever offers them - are rarely good value.

tinajaynens

Thanks for the quick reply. So is the Sum Assured not relevant then?

InsideInsurance

tinajaynens wrote: »

Thanks for the quick reply. So is the Sum Assured not relevant then?

Sum Assured gives a minimum it will pay out upon death. This can be the original sum insured, it may may be the original sum insured increases annually either using an index or a predefined formula etc. It means the insurer cannot come back to you later and say their investments havent worked out as they expected and thus the payout goes down.

You need to find the original wording to confirm how the sum was to be adjusted.

Quentin

tinajaynens wrote: »

Thanks for the quick reply. So is the Sum Assured not relevant then?

You need to get back to the insurer and get them to tell you how they have arrived at the figure.


(The sum assured may or may not be relevant - but you need to know how they calculated the current value before challenging it with your own findings)

tinajaynens

Thanks everyone, really helpful replies!
I've just emailed LV to ask how they calculated their offer figure.

tinajaynens

Hi All, re my thread of a few days ago, thanks so much to you all for giving ideas/info.
I finally have a breakdown from the insurance company. Hoping I can get some tips on how to challenge it/ask for more money, basically!

The original sum assured: £298.80 (I've checked, and when old money was decimalised, the £ amount stayed the same)
Regular bonuses up to Nov 2007 (when it became a free policy) £561
Regular bonuses since Nov 2007 £20.92
Life Assured Premium Relief £101.75
Total £982.47
Final bonus £1684.92

Hence the payout of £2667.39

Any comments/ideas will be greatly appreciated!!

magpiecottage

The policy contracted to pay the original sum assured plus such bonuses as the insurer determined from time to time, and on claiming, it should apply as the policyholder's share of the company's profits.

This is the basis of a "with profits" policy. It is not linked to any particular index and can produce more, or less, than you might get elsewhere.

The only guarantee is that, once added, bonuses cannot be taken away provided premiums continue to be paid as they fall due.

£298, 16s, 0d is indeed £298.80, though. A shilling was worth five pence and from 23 April 1968 5 pence and 10 pence pieces were used as shilling and florin (2 shilling) coins until decimalisation. Afterwards, shillings and florins were used as 5 pence and 10 pence for many years.

tinajaynens

Thank you Magpiecottage, and sorry if I sound thick, but are you basically saying that there's no way of checking what the bonuses should be, it's whatever the company say their profits have been?

Looking at the bonuses, I'm personally of the opinion that it's not a bad offer, but I keep being told that insurance companies nevertheless will make a low initial offer, so I will ask for more regardless.
Do you have any thoughts on that stance please?

rs65

tinajaynens wrote: »

Looking at the bonuses, I'm personally of the opinion that it's not a bad offer, but I keep being told that insurance companies nevertheless will make a low initial offer, so I will ask for more regardless.
Do you have any thoughts on that stance please?

Personally, I think its nonsense. I've never known this to be a bartering situation.

If you genuinely think you are not being treated correctly then make a complaint and if still dissatisfied refer to the FOS.

kingstreet

tinajaynens wrote: »

but I keep being told that insurance companies nevertheless will make a low initial offer

That's on claims on short-term insurance such as car insurance, or home insurance.

On long-term products the precisely calculated maturity value is exactly that. It reflects the policy sum assured and its share of the with profit fund over the years it's been in existence.

Life offices have made mistakes with maturity values over the years and had to correct them, but they were issues across the whole fund, rather on individual policies.