Matured Life Assurance Policy

chickenlips_3

Hello...new to this site and was just wondering if anyone can help.
My mum who is 87 yrs old had a life asurance policy which became fully paid up over 2 years ago (matured). She had been paying £52 per year for 28 years.The company in Question continued to take the premiums for a further several months and it was only that my sister noticed that she got the over payments back.However apart from that time she contacted them my mum has never had any correspondence with or from the concerning this policy.
Some weeks ago my mum wrote to the company in question and said she wished to have the money on the policy as she needed it and she enclosed her policy .My mum recieved a check today for £743 ...when i worked out the premiums she had paid it was almost £1500 .This cannot be right surely..? if anyone can give me any ideas or advice i would be most grateful.

dunstonh

This cannot be right surely..?

Why not?

It sounds like a whole of life assurance policy typically issued by the old home service companies like Pearl or Refuge. These are where you pay for the life cover but there is a small "investment" element which acts to increase the life cover gradually over time. If you surrender, you get back the investment value but not the sum assured. Many of these plans didnt require payment after the 80-85th birthday but retained the benefits as if it was still being paid.

The company in Question continued to take the premiums for a further several months and it was only that my sister noticed that she got the over payments back.

A lot of these policies, if industrial branch which is probably is given the age, were paid by collections. When collectors started to be phased out, the companies moved to standing orders. The insurance company cannot stop the standing order. It can take some months for an overpayment to come to light but they would have done at some point. The insurance company would have written to your mother to tell her to cancel the standing order.

Nothing seems to be wrong here apart from the decision to surrender it. That threw away the sum assured. Had it been left until death, the payment then would have been the sum assured plus bonuses.

Trufles2

Hi
New to this forum so just wondering if anyone can help. My husband and I took out a whole of life policy when we first got married. We pay £32.50 a month, after 10 years the policy was reviewed and the pay out on death went from £60,000 down to £45,000 after the next 10 years we had another reduction to £37,500. Can they do this? by the time one of us dies it won't be worth the paper it was written on. As it is a whole of life policy it will be paid out after one of us dies, whatever the age. I'm loathed to cancel it as we have paid into it for 20 years, but is it worth continuing?

dunstonh

Can they do this?

Yes. It was not a guaranteed plan but a reviewable one. In your case, every 10 years.

by the time one of us dies it won't be worth the paper it was written on.

Its one of the risks of going with reviewable.

I'm loathed to cancel it as we have paid into it for 20 years, but is it worth continuing?

I would suggest you see an IFA and see if you can get it changed to a non-investment linked, guaranteed whole of life policy. With life cover becoming cheaper in the last decade it could be that you are able to increase the sum assured back for the same premium (subject to health).

Like most products bought in the 80s, the version you have is largely obsolete and been replaced with better.