Friends Life Insurance policy taken over by Aviva

Dorrian

Hi my Mother had a life insurance policy since 1990 with Friends Life called "Lifespan" , in 2017 Avia took then over 
Friends Life & the policy .They stated that " there will be no changes to your policy terms & conditions & any benefits
will not change as a result of these transfers. There will be no changes to the way we service your policy".

They reviewed the policy in 2018 & 2019 & no changes were made however in 2020 they reviewed the policy & decided
the estimated fund value was not enough to continue providing the current level of cover. It has been £20 a month for
£15000 of cover since 1990 & no changes were made until Aviva took over. They wanted £55 to continue the same cover
or reduce the pay out to £8940.00 with a surrender value of £5789.00.Now once again they have decided there is not enough
& the costs of servicing the policy mean they will reduce the amount to £6290.00 with a surrender value of £5500 or raise
payments to £35 a month.

But what has confused her is the letter in 2017 stating "there will be no changes to your policy terms & conditions & any benefits
will not change as a result of these transfers", & yet changes are happening yearly ,if this continues will there be anything left
in the end & will the surrender value disappear ,she has contacted them but had no reply.

Thank you for taking the time to read this post

dunstonh

Friends Life & the policy .They stated that " there will be no changes to your policy terms & conditions & any benefits
will not change as a result of these transfers. There will be no changes to the way we service your policy".

That is correct.  No policy terms getting changed on takeovers and mergers.

But what has confused her is the letter in 2017 stating "there will be no changes to your policy terms & conditions & any benefits
will not change as a result of these transfers", & yet changes are happening yearly ,if this continues will there be anything left
in the end & will the surrender value disappear ,she has contacted them but had no reply.

Premiums are only guaranteed on plans with guaranteed premiums.      She has an investment-linked life assurance plan (the sort that went obsolete around 1995).   These plans need the investment to return an average in excess of the target figure (set at the outset). They have review points on them. Typically starting in year 10 or 15 and then every 5 years thereafter.  If the investment element is falling short, then either the premiums need to increase or the sum assured reduced.

This has nothing to do with Aviva/Friends merger.   It is all to do with the type of plan it is.

Old_Lifer

There will have been no change to the terms and conditions.   If it was a reviewable policy before the merger , it will still be a reviewable policy thereafter.

The cost of providing the life cover increases each year and later in life, the premium is no longer sufficient to purchase the existing level of cover going forward   and a premium increase is requested.    At each following review the cost of providing the cover will continue to rise so the policy will become increasingly more expensive.  The policyholder will be faced with a choice at each review: either pay  a premium which will rise ever more steeply   or  see the sum assured steadily decrease.

Many later in life will probably struggle to meet the ever rising  cost of reviewable policies.