Scottish Widows Whole Life Endowment "Both Ways" Policy

Novicerider

I took out a Whole Life policy with Scottish Widows in 1979. It had a clause that allowed me to increase ("Increase Option") the value which I exercised in 1984 and a separate policy was issued. In 1988 I exercised a Right of Conversion in the original policy and turned it into an Endowment with a maturity date of 1/1/2020. I had always assumed that when I converted to an Endowment, BOTH policies were included (as the second policy was taken out as an INCREASE OPTION). Scottish Widows now tells me that the second policy is a Whole Life policy of little value with no maturity date!!

Has anyone had any experience of this type of Assurance? Any relevant advice most welcome. I will be taking to the Ombudsman but wondered if anyone else has had a similar problem?

SonOf

From memory, the increase option instigated a new plan for the increased amount. So, any conversion would be on a plan-by-plan basis. I have topped up older investment-backed SW life plans in the past and each time they issued a new policy. This would be done because of chargeable gains taxation and allowing future use of policy segment surrenders. A top-up/increase has to create new policy segments.

I will be taking to the Ombudsman but wondered if anyone else has had a similar problem?

Have SW volunteered to allow you access to the FOS? (as your case pre-dates regulation).

Novicerider

SonOf wrote: »

From memory, the increase option instigated a new plan for the increased amount. So, any conversion would be on a plan-by-plan basis. I have topped up older investment-backed SW life plans in the past and each time they issued a new policy. This would be done because of chargeable gains taxation and allowing future use of policy segment surrenders. A top-up/increase has to create new policy segments.



Have SW volunteered to allow you access to the FOS? (as your case pre-dates regulation).

Thank you very much. Although your info doesn't give me much to hope for. I was not aware of the reasons why a new policy was issued or that my case would pre-date regulation. But I dont have any indication that the second policy would be excluded, even in 1988, surely they should have let me know?
Thank you again.

SonOf

But I dont have any indication that the second policy would be excluded, even in 1988, surely they should have let me know?

It all comes down to how it was asked. The increment would have a new policy number. So, if you asked for policy ABC to converted, they would have no reason to convert a policy with a different policy number or even ask you if you want th other one converted.

Providers do what you ask them to do. No more, no less.

Old_Lifer

When you asked to exercise the conversion option, you would have been sent documentation which would have stated the policy number of the policy to be converted, the desired maturity date, the revised premium and the date on which the conversion was to take place.


For the conversion to go ahead, you would have had to sign and return a form of request, in which the above information would be repeated.


Following conversion of the policy, a policy endorsement would be issued evidencing the change in the policy.


The 'new' whole life policy is a different policy. We do not know if it even has a conversion option .


Sadly, I can see no point in complaining -.

Novicerider

SonOf wrote: »

It all comes down to how it was asked. The increment would have a new policy number. So, if you asked for policy ABC to converted, they would have no reason to convert a policy with a different policy number or even ask you if you want th other one converted.

Providers do what you ask them to do. No more, no less.

I take you point. However, I would argue that as the increase option was a part of the original policy, and then I triggered the conversion, I had assumed that the increase would have been included. I certainly wasn't told it wouldn't be. I would liken it to asking a builder to build an extension on your house, and then asking him to install central heating, only to find out later that he had only installed central heating in the original house and excluded the extension!

Old_Lifer

May I urge you to spend a few minutes looking at the 'new' whole life policy to determine if it is a level premium policy or if it has reviewable premiums.


With a reviewable whole life policy, the cost of the life cover increases with age. The reviews are usually every five years. A policyholder may not be aware a review has taken place if the current premium is sufficient to purchase the life cover, until one day he is asked to pay a higher premium and thereafter increasingly higher premiums at each review.

Novicerider

Old_Lifer wrote: »

May I urge you to spend a few minutes looking at the 'new' whole life policy to determine if it is a level premium policy or if it has reviewable premiums.


With a reviewable whole life policy, the cost of the life cover increases with age. The reviews are usually every five years. A policyholder may not be aware a review has taken place if the current premium is sufficient to purchase the life cover, until one day he is asked to pay a higher premium and thereafter increasingly higher premiums at each review.

Interesting. But not sure I see the relevance? The premiums have always stayed the same though.

Old_Lifer

The reason I suggested you check your policy to see if it has level or reviewable premiums, is so that in the event that you have a reviewable policy, you are aware that it is likely that at some point in the future you will be asked to pay more for the the same amount of cover.


The Forum often receives complaints from policyholders with whole life policies who have paid the same premium for decades and are suddenly faced with a demand for a much higher premium for their existing level of cover.


If you click on my username and click on 'find more posts' my posts of 18.10.19 (thread title 'Premium Hike - Is This Even Legal?) and 6.11.19 (Whole Life Insurance Cruelty) are recent posts dealing with this topic.

Novicerider

Old_Lifer wrote: »

The reason I suggested you check your policy to see if it has level or reviewable premiums, is so that in the event that you have a reviewable policy, you are aware that it is likely that at some point in the future you will be asked to pay more for the the same amount of cover.


The Forum often receives complaints from policyholders with whole life policies who have paid the same premium for decades and are suddenly faced with a demand for a much higher premium for their existing level of cover.


If you click on my username and click on 'find more posts' my posts of 18.10.19 (thread title 'Premium Hike - Is This Even Legal?) and 6.11.19 (Whole Life Insurance Cruelty) are recent posts dealing with this topic.

As my policies are maturing on 1/1/20, premium hikes are not too much of a worry! But thank you for your advice, much appreciated. It looks like my only course of action is to pursue SW for misleading advice. They didn't specifically say that the increase option was excluded from the conversion and I just assumed it was. I doubt that argument will get me anyway, but it is the truth of the matter. Especially as they wrote to me with regards to the conversion, I didn't contact them, and no independent advice was recommended by them, and it did occur in 1988 which, I believe, does mean it is covered by the Ombudsman scheme.