Overpaid life assurance premiums

diegosuarez

On a life assurance policy taken out many years ago , I now realise
that I have over- paid (direct debit) by at least £300. ! Careless of me I know.. Having queried this with my new policy holder Aviva I am told that I can close (cash-in) the policy on the anniversary, ie April , .. Value ! not guaranteed.. at a loss of around £800 The initial amount was £2000. not much I know, but this was around thirty five years ago !!? What recourse do I have.. if any ? Thanks for your interest ?

dunstonh

What recourse do I have.

none.

You have not overpaid in terms of policy conditions. There is no wrongdoing. The insurer have continued to provide services and you continued to pay them.

The fact you wanted to cancel earlier but didn't is no-ones fault

diegosuarez

dunstonh, thank you for your reply..You state that I have 'not overpaid in terms of policy conditions' Since the initial amount (without profits) of the amount insured was £2000. and having paid in approx £2308.. surely I should have been advised that I had in fact 'overpaid' the agreed amount !? It is not a question of 'wrongdoing' as such, but I feel that Friends-life, now Aviva,would in all fairness,have informed me at some time that I had in fact paid too much for the life cover amount !

dunstonh

surely I should have been advised that I had in fact 'overpaid' the agreed amount !?

No.

The terms of the policy would depend on whether it is whole of life assurance or a term assurance.

For term assurance, you pay a premium each month from the start of the term until the last month of the policy and then it expires. Yours doesnt sound like one of these (based on what you have said)

For whole of life assurance plans, you pay the premium from the start until you die (or cancel the policy). Even if the underlying value becomes a figure that is greater than the sum assured paid out on death. Some providers have plans that allow you to stop paying when you reach a certain age but retain all benefits as if you were paying.

The decision to continue paying or not is one that you make or your financial adviser makes. It is not for the insurance company to decide. Indeed, they do not hold the regulatory permissions to make that sort of decision. in fact, they dont even know the purpose you took the insurance for. Different people take them out for different needs. So, they are not in any position to know what your plans for the policy were. It isn't their remit. They wont know if your plan was to stop it when it hit a certain value or to keep it going beyond that to retain it and start building a higher value.

For example, life assurance based investments are not included in any means tests. So, some may prefer to retain them to ensure their benefits continue.

It is not a question of 'wrongdoing' as such, but I feel that Friends-life, now Aviva,would in all fairness,have informed me at some time that I had in fact paid too much for the life cover amount !

They issue the statement once a year. That is the only requirement put on them.

Aretnap

You have asked about this policy before.

https://forums.moneysavingexpert.com/discussion/5724289

It's the nature of insurance that some people pay in more than they take out - if everyone took out more than they paid in how would insurance companies survive? I've paid thousands of pounds in car and home insurance premiums over the years. I've never got a penny of it back and I hope I never do - if I do it will be because I crash my car or because my house burns down. I don't want either of those things to happen just so that I feel better about the premiums I've been paying. Can I claim compensation for the amount I've "overpaid"?

In the case of life insurance, the way to make money from it is to die young. People who live to a ripe old age are in effect subsidising the people who die young. I still think on balance I'd rather live to a ripe old age!

diegosuarez

Hello dunstnh, my apologies for the delay in replying to your last letter. I must say I found it quite interesting and indeed , enlightening .I must confess , the only type of insurance I think I understand, is car (which I do not now have) and home and contents !! I feel you have made it clear the big difference and accept your reasoning . . My main consideration is is what would be my best option; to terminate (cash -in ??) or just carry on paying until death ? thanks again for your time

diegosuarez

Hello Aretnap and thank you for your interest..Did not realise that I had aired this question before, Must be an 'age' thing and 'perhaps feeble-mindedness on my part !? I think however the big difference between car/ home insurance , is, I can insure against accidents but life/death, is total ...! Yes I agree , living too long , 'means losing out ' (financially) ,bit twisted logic I know , but indeed a fact.. At almost 97, I'm at the wrong end (LOL) which brings me to the question, which I asked dunstonh (apologies to him for getting the name wrong) do I' cash in' ,( maybe lose,) or carry on paying ?? perhaps for a further 1. 2 years
Thanks again

Quentin

If you stop paying the premium you get some more money now ..

If you keep paying then at some time your estate benefits by more money

Do your beneficiaries need it more than you??

Can you afford to pay it?

All questions only you can answer and it really is your call

csgohan4

Whole life assurance are expensive because they pay up on your death, not to a certain age. Is it still the correct product for you OP?

diegosuarez

Good morning Quentin ,thank you for the input.and the relevant questions , yes indeed, they are questions and answers only I can provide. My beneficiaries will be well provided for,irrespective of this small premium, which in comparison with 45 years ago , would probably, now buy 'tea and buns ' ? But the principle involved here ,is , having paid in much more than the actual sum assured, do I still keep paying in, for the remainder of my life ?? No matter how short the time ? Thanks again I repeat, and agree with you 'the ball is in my court' !

diegosuarez

Hello csgohan4 , In brief, NO ! I realise after so many years that I should have been more aware regarding whole life insurance , but then I suppose we all ' Live and learn' My original question was in effect, " do I carry on paying a monthly premium for something already well covered" or do I just 'write it off' ?? Thank you again