Grandparents Life Insurance

bri90bri

My grandparents currently have 3 life insurance policies between them, my granddad has 2 and my gran has the 1. I changed their direct debit details for them the other week and requested a statement. My granddad is 90 this year and my gran will be 87. On the document the company sent me it shows that the pay out is less than what they have paid in is this correct? They are worried there wont be enough for funeral costs never mind anything else. Each policy according to the documentation is paying out £2000 or less.

molerat

Many of these policies sold to "oldies" are like that. Have you not seen the TV ads - "the policy may pay out less than you have paid in". The problem with a lot of them is that if you stop paying the policy ceases and is worth nothing. Read the policy, it should tell you exactly what they have got - post the policy names here and some of the experts will be able to help.

dunstonh

My grandparents currently have 3 life insurance policies between them

With Life insurance, it is not uncommon for people to end up paying more than the sum insured. With life assurance plans it is rare (tends to only happen on investment backed ones where investment returns have been really poor).

On the document the company sent me it shows that the pay out is less than what they have paid in is this correct?

If it is life insurance (such as an over 50s plan) then yes that is quite normal and likely to be correct. That is why they are unsuitable for most people and considered an option of last resort (its also why most are retailed without advice as an adviser can rarely recommend them justifiably but direct sales/adverts dont offer the same level of consumer protection)

bri90bri

I will get the names and get them posted tomorrow, wasent sure if i was allowed to name the company and such on here, it just seems horrible that they have paid in a total over the 3 policies of about 7 grand over 15 - 20 years and are only getting about £3000 paid out.

ACG

It depends on how you look at it...
They could have died, paid less and had a payout of more than they paid in?
I have paid thousands on my car insurance and never had a payout, I have paid hundreds in home insurance and never had a payout.

bri90bri

yea i understand that in regards to car insurance and home insurance but life or should i say dealth is assured to happen, i thought the pay out should be lots, mine is 40 grand if i die

ACG

But nobody knows when. Look at Amy Winehouse, 27.

Yours paying out £40k has no relevance what so ever. You took out a different policy at a different time and at a different age. Term assurance is very different to a whole of life policy.

In short, its not impossible to pay in more than you get out. Thats why at the end of those sun life adverts they say "you may pay more than you get out".

Delete33

These Policies are designed to give you peace of mind, how would your family pay for YOUR funeral with costs rising. Preying on folks good intentions.

bri90bri

thats what i am saying the policy dosent give peace of mind as they dont pay out enough to even cover a funeral never mind 2 plus the remaining mortgage on the house

ACG

Did they go through a broker or direct?
Who decided how much insurance to take? They can presumably increase the premiums now if they want to (and in turn the cover amount) or cancel the policy.

Nearlyold

Think about it logically, 100 people age 50 take out a life cover policy that will last until they die ALL of them will die at some point, some earlier, some later, it would be unsustainable for an insurance company to pay out "lots" more than was paid in on every single one - they would go bust.

With term insurance those that don't die during the term (the majority) provide the money for those that do die during the term.