Level term life insurance

oyeoye

I would like some advice as I have a level term policy that I have had for around 30 years. In the last 2 years I have received 2 letters from the company telling me that they can no longer offer me the same amount if I die. The amount has decreased by by about 24k over the 2 years. I am wondering whether this is legal as I have a signed document from them in about 1990 laying out the monthly DD amount and the amount payable if I die? Surely they are breaking a contract?

dunstonh

In the last 2 years I have received 2 letters from the company telling me that they can no longer offer me the same amount if I die.

It is extremely rare for premiums on the life assurance side to get increased.  On guaranteed premium plans it is not possible and on reviewable premium plans it only tends to happen if there if they beleive they are likely to suffer a greater number of claims than expected.  That clause is rarely activated.

Is it possible you have a yearly renewable term assurance?  Or a whole of life assurance?  or an investment backed policy?

With those, getting periodic letters requiring premium/sum assured adjustment is commonplace.

I am wondering whether this is legal as I have a signed document from them in about 1990 laying out the monthly DD amount and the amount payable if I die?

The key is in the wording.  If it states it has guaranteed premiums then they must comply.  If they are reviewable then they are not guarnateed.  What does it say?

Surely they are breaking a contract?

Only if they are breaking the contract terms.  More info is needed before you can make that judgement.

coachman12

It's a new one to me, oyeoye ( and welcome to the Forum).
 Is it a well-known reputable company? Are you positive it is a standard level term life policy( which must have been for over 30 years ----or a lifetime policy?).
From what you say , it doesn't sound like a decreasing term policy ----and, anyway, they don't work as you have described.
Your policy can be cancelled if you miss payments or pertinent information which you did not originally declare comes to light.
But the experience you have encountered is very odd. Did you say anything to the company 2 years ago when this disgraceful behaviour first happened ? Do so now, and definitely get to the bottom of this peculiar behaviour. All the best-----and let us know what the company has to say for itself please !

Weighty1

I think it is probably more than likely that you have a unit-linked whole of life plan rather than a normal, level term assurance plan.  A U.L. WOL has a portion of the premium invested in the hope that in future years they will be able to maintain the same premium and same level of cover, however, these were typically taken out at a time when investment returns were a bit better than they are now so the expected growth of the investments with these plans hasn't been sufficient to maintain the level of cover.  In that instance you either have to reduce the cover amount or increase the premium.

Out of interest, did you his a significant birthday in the last couple of years, such as reaching age 70?
If it is one of these plan it is totally legal and completely normal.  There are loads of threads about this sort of thing happening.

Old_Lifer

A level term assurance has a fixed premium  and  a fixed term,   hence the name  ' level term'.     In effect you overpay in the early years  and underpay  later in the term,   so  the premium  is  levelled to produce a premium which remains the same throughout the term.

May I suggest that you look at your documentation  carefully   to see if you have a  'Whole Life Assurance' and look at the premium section to see if it says that the premiums are   'reviewable'.       Your post does  point to this being a reviewable whole life policy.

With a reviewable whole life policy the life cover is costed on a 'single premium basis',   which means that the cost of the life cover is re-calculated each year and increases with age.   Reviews  are normally carried -out  every 5 years   and  where  a whole life policy has limited premiums   (that is to say it has a  premium  payment term),   annually in the last five years of the term.    A policyholder may not be aware that earlier reviews have taken place,     until at a  review   later in life  as the life cover becomes increasingly more expensive each year,   he is suddenly asked to  pay more or suffer a reduction in the life cover.

Old_Lifer

If you have a reviewable policy which seems to be the case here,   at the next review  you will be even older  and the cost of purchasing the  life cover will have risen,  which means that you will either be asked to pay a higher premium to purchase the existing amount of cover    or you will  be faced with a further reduction  in the level of cover.