personal life insurance

nevillecowan

Hi
I have had a letter from Abbey Life who I have a small pension life cover with. Value 40,000,00 They have notified me that for them to keep the value as it is they will have to increase the monthly payment. if I elect to leave the payment as it is then the value will drop to 31,474.00. Can insurance companies do this? If so whats the point in taking out the policy in the first place if you know its going to change value. In the past you reviewed your policies to increase the payments to up the value. Am I wrong or am I wrong?
thanks

dunstonh

Can insurance companies do this?

If the policy has reviewable premiums, then yes. Only on guaranteed premiums do they have to stick to the same premium.

If so whats the point in taking out the policy in the first place if you know its going to change value.

It's the type of policy you bought. If you had bought life assurance with guaranteed premiums, this would not be the case.

It sounds like you have a whole of life assurance with an investment element. The premiums and sum assured would have been set based on achieving a certain investment return. Investment returns are lower than they used to be (as inflation has come down) so many of these plans havent been able to get the returns they needed to keep the sum assured and premiums the same.

Modern versions of these plans are available with no investment element. Plus life assurance is cheaper today (hit its low point about 4 years ago and has increased a bit since then but still lower than 10 years ago). You may wish to compare against modern alternatives.

nevillecowan

thanks for your help I will do some research

Sam_M_81

Help. Im a single homeowner with a mortgage who lives alone. Do i really need life insurance and critical illness??

dunstonh

not life assurance but PHI and CI apply to you.