Late Endowment payout by Provider

Old_Lifer

If we assume this was a surrender in 2009 :


1.) The policyholder who it seems 'did not realise there would be any value in the policy to still payout' and who seems to have forgotten about the policy, still seems to have managed to approach the Life Office for a surrender value.



2.) The policyholder would have to decide to go ahead and would then have to complete a form of discharge and return this to the Life Office together with the policy. It is only upon receipt of these and any assignment regarding any change in ownership that the surrender would go ahead and the surrender value become payable.


3.) The surrender value would generally be paid within 7-10 days of receipt of the completed documentation. If the policyholder was expecting a large payment within the next week or so why did he not query the non-payment?


As previously stated, the amount of interest for late payment appears normal.

kingstreet

It sounds like premiums were stopped and the life office made the plan paid-up with a reduced sum assured, either following contact and confirmation from the policyholder, or after a fixed period of time according to the policy's non-forfeiture provisions.

Old_Lifer

For those who may not have Kingstreet's knowledge and experience, I should perhaps explain the Non-Forfiture Regulations which applied to a conventional life policy.



In order to assist a policyholder who may have been suffering temporary financial hardship and finding it difficult to pay the premiums under a policy, the traditional Life Officies had 'Non-Forfiture Regulations' which provided temporary relief, way beyond the normal days of grace.


The Non-Forfiture Regulations applied to any 'value' policy. In life assurance, a 'value' policy is any policy which has acquired a surrender value. They would not cover a 'non-value' policy such a a term assurance or an early-stage endowment or whole life policy.


Where premiums had become outstanding. the Life Office would maintain the policy fully in force for a period of up to twelve months from the date of the first overdue premium. This allowed the policyholder a year in which to sort-out his finances while maintaining his life cover in force. At any time during that period, premium payments could be resumed subject to payment of the arrears and interest and without evidence of continued good health.


If, at the end of one year from the date of the first outstanding premium, the premiums under the policy were still outstanding, the Life Office would surrender sufficient of the policy to pay the outstanding premiums and interest and would then convert the balance of the policy remaining to paid-up.

Old_Lifer

I think I should pay a little more attention to my typing nowadays, or perhaps my computer simply finds it difficult to type certain words such as non-'fOrFeItUrE'

Thrugelmir

Redin wrote: »

My questions are:
- Is this an appropriate sum in recompense considering the excessive length of time it took to make payment?
- is there a case for an endowment mis sale? My father in law does not understand what an endowment is, that it is invested in the stock market or the consequences of surrendering early?

To provide clarity one would need to know what action your father took at the time. Did he simply cancel the DD to cease paying the premiums for example. Surrender requires return of the policy document. Did this happen?

Redin

Hello All,
Success! '8% simple' payout

Thank you for all your thoughts and comments on this one. Just to update with the conclusion to the story (!):
- So, my father in law (FIL) simply stopped paying the policy in 2006, it became paid up and a payout was due in 2009;
- My father in law (FIL) contacted Royal London (RL) asking for clarification on why the payment was late- he was told that a system issue had meant paid up policies were not flagged as 'payment due' and a 'Rectifications' team had been specifically set up to deal with this issue;
- My FIL raised a complaint regarding the 1.5% per annum offered initially over the 10 year delay period; this was increased to '8% simple interest' by RL. This is standard PPI/endowment payout offer.
- My FIL accepted this offer. I suspect RL have a 3 stage complaint process in place so if pushed would have paid more. However, he was happy, and if he is I am!

All the best and mwah old lifer and keep pedalling!

Redin