miss sold a index link life insurance

thistimenextyearrodney

I took out a life and critical illness insurance policy 5 years ago with prudential - it has since changed to vitality life - when I took out the policy I was told it would vary a LITTLE each year - I told them I wanted to pay the same they said it would be minimal.
when I took out the policy I was paying £18.49 a month - It has gradually creeped up - I am now paying £24. I received a call last week from a insurance reviewer from 'rest eazy' insurance brokers who apparently sorted out the policy when I took it out- he has informed me I have been sold a 'indexlink' policy - and the vitality online deals that come with my plan are not beneficial to me - I can earn points going to the gym and having a medical - the points add up to bronze silver and gold and affect my repayments - he also told me that by the last year of my policy I will be paying nearly £97 a month!!! what can I do? can I say ive been missold a policy and try and claim it back? help!!??

dunstonh

he also told me that by the last year of my policy I will be paying nearly £97 a month!!!

£97 at the end of the term is not the same as £97 today. Inflation indexing is there to keep the real terms sum assured the same.

what can I do? can I say ive been missold a policy and try and claim it back?

How have you been mis-sold? You knew what you bought at the start. You went along with that.

It seems you are now having a charge of heart and want a different product. If so, then change it.

thistimenextyearrodney

£97 is a big jump from £18!! even if its in 20 years time.
I was expecting a LITTLE like he said at the beginning - not that much!


I think I was missold as I was told it would go up a LITTLE -

rs65

thistimenextyearrodney wrote: »

£97 is a big jump from £18!! even if its in 20 years time.
I was expecting a LITTLE like he said at the beginning - not that much!


I think I was missold as I was told it would go up a LITTLE -

It has gone up a little.


How do you know £97 is correct?

rs65

thistimenextyearrodney wrote: »

I received a call last week from a insurance reviewer from 'rest eazy' insurance brokers who apparently sorted out the policy when I took it out

Was it them or have you been cold called by someone trying to sell you new insurance?


If it was them who originally sold it to you, why would they suggest that it was mis-sold?

thistimenextyearrodney

he told me next year will be 26 then 28 then 32 then but the end 97

dunstonh

If it is inflation linked then the rate is determined by inflation and that cannot be pre-judged. You can use assumptions but assumptions typically use 2.5% for inflation. It has been less than that recently.

£97 is a big jump from £18!! even if its in 20 years time.

Not really. Its about the equivalent of £40 today

ACG

I have just gone into excel and put £18 and then multiplied it 105% every year (ie index linked at a rate of 5%).

Im not sure if this will show correctly or not, but in 20 years the premium will be £47ish.

£18.00 £18.90 £19.85 £20.84 £21.88 £22.97 £24.12 £25.33 £26.59 £27.92 £29.32 £30.79 £32.33 £33.94 £35.64 £37.42 £39.29 £41.26 £43.32 £45.49 £47.76

90p, 95p, 99p increases in the first few years. Even in 15-20 years the increases are only £2.30ish but that will be all relative as incomes will have gone up also.

As Dunston says, if the policy is not right, not what you want then change it, but to say its been miss sold because the premiums are increasing is probably not going to wash. Im not sure you could argue the broker has lied as £1 a year to most would be classed as a little. How much have the premiums risen since you took the policy out?

The only other thing I can think (and im sure the broker who sell pru products can confirm) is that it could be an age related policy? In which case the premiums get reviewed as you get older and that would probably have an imact also.

Credit-Crunched

This sounds like the Vitality Optimizer product.

In essence you get rewarded for healthy life choices, gym attendance, step monitoring, health screenings etc.

If you do not do the above then it increases each year, if you do the above and obtain certain 'points' it actually reduces over the years.

It is quite tough hit the levels required, but with a bit of effort it is possible.

The policy may not be index linked, but have the VO, whereby you have a lower premium initially.

Can you please let us know the full policy details.

Brightspark87

I agree with above sounds like the benefit isnt increasing but that its just to over the same level of cover the premiums increase with time.

If you want the premium to stay level throughout the policy life then you tend to pay more in the early days. Many people prefer increasing as they are cheaper in the early days!

Weighty1

If the OP says he's been advised that it's index linked then it probably is. The thing to remember with Vitality is that index linked plans increase annually by RPI +2.5% so based on RPI being ~3.1%, 2.6%, 2.4% in 2012, 2013 and 2014 this could easily result in the premium increase being indicated.

The compounding nature of the increases will make the premium increase fairly dramatically in the later stages of the plan. It's difficult to justify a plan which will quadruple in cost over 25-years but will only provide twice the level of cover.