Phoenix Life Death benefit rip off

Ruthie_v

My grandma sadly passed away last week and I have received a claim pack for her death benefit policy which is with Phoenix Life. The death benefit is a total of £761. However the total sum that she paid into the account in premiums since 1996 was £2472. When I questioned why the benefit was so small compared to what was paid in, the response was that the policy was taken off without financial advice, so the conditions were that she had to continue paying premiums for the rest of her life, regardless of how much has been paid in. 

I realise she had taken this out voluntarily, but this seems like absolute robbery to me, I still can't quite believe this is allowed. The benefit is worth 30% of what was paid in!

I've lodged a complaint with Phoenix and will refer to the financial ombudsman, I really hope something can be done about this and they don't just say its 'tough' as it was agreed to. Now we as a family are hugely out of pocket. Has anyone any experience of this? 
TIA 

Ruthie_v

I should add that the reason my nan took the policy out was to help with funeral costs, so the benefit is intended for the funeral

lincroft1710

Have you actually read the policy document and any accompanying correspondence. If not I would suggest you read it all very carefully. A rough calculation shows your grandmother was paying approx £100 a year so just under £2 a week and after 8 years (by 2004) would have paid in more than the benefit.


You say your family is "hugely out of pocket" but your family is not obliged to pay for a funeral. Funeral expenses come out of the deceased's estate and if there are insufficient funds in the estate there is actually no legal obligation for the family to pay for a funeral although many will do so

Marcon

Ruthie_v said:

My grandma sadly passed away last week and I have received a claim pack for her death benefit policy which is with Phoenix Life. The death benefit is a total of £761. However the total sum that she paid into the account in premiums since 1996 was £2472. When I questioned why the benefit was so small compared to what was paid in, the response was that the policy was taken off without financial advice, so the conditions were that she had to continue paying premiums for the rest of her life, regardless of how much has been paid in. 

I realise she had taken this out voluntarily, but this seems like absolute robbery to me, I still can't quite believe this is allowed. The benefit is worth 30% of what was paid in!

I've lodged a complaint with Phoenix and will refer to the financial ombudsman, I really hope something can be done about this and they don't just say its 'tough' as it was agreed to. Now we as a family are hugely out of pocket. Has anyone any experience of this? 
TIA 

I can understand why you are so upset, having been bereaved so recently and then having this unwelcome news on top.

As someone else has already pointed out, had she died shortly after taking out the policy then it would have looked like a 'good value' insurance - which is what it was, rather than a savings product. Happily you had her in your life for many years more, but less happily the policy became decreasingly valuable and she chose to go on paying anyway, probably because she didn't think about doing anything else (like many of us).

If the terms of the policy were that she had to continue to pay for the remainder of her life to get any sort of payout after her death (and I presume she did so?), then sadly it is highly unlikely you have valid grounds for complaint if Phoenix has complied with those terms. 

Ruthie_v

Thanks for the helpful and sensitive comments.  Thankfully the sarcastic comment about 'clever nan' has been deleted - how insensitive and upsetting this was given that my nan is currently laying in a chapel of rest. It is indeed a very upsetting time. 

Yes she was obliged to pay every year until her death, she would have had no idea that she would lose out to such an extent, she wanted to make sure the funeral costs would be largely covered. I realise Phoenix Life haven't broken any terms, however I feel the policy was unfair given that there was no end date to the payments. £761 is a pitiful amount really, my nan would have been mortified, but I understand the difficulties faced in raising a complaint.

Thanks again

Mojisola

Ruthie_v said:

I realise Phoenix Life haven't broken any terms, however I feel the policy was unfair given that there was no end date to the payments. £761 is a pitiful amount really, my nan would have been mortified, but I understand the difficulties faced in raising a complaint.

Raising a complaint won't get you anywhere but you can tell as many people as possible to avoid these awful policies. 

www.moneysavingexpert.com/insurance/over-50s-life-insurance/

Robin9

@Ruthie_v   My apologies that you found that my response so upsetting.  It was very blunt and not appropriate.

What I do find about the policy is that it could not have been cancelled at any time and that that may be an unfair condition.

Ruthie_v

Robin9 said:

@Ruthie_v   My apologies that you found that my response so upsetting.  It was very blunt and not appropriate.

What I do find about the policy is that it could not have been cancelled at any time and that that may be an unfair condition.

thank you

Pennylane

I am surprised. my Mum died last year and Phoenix were brilliant. Of all the organisations I had to deal with after she died, they were by far the most prompt and polite and I told them so.  They answered the phones promptly, dealt with my call sensitively and paid out very quickly. 

Marcon

Robin9 said:

What I do find about the policy is that it could not have been cancelled at any time and that that may be an unfair condition.

I'm afraid you are raising false hopes. As with virtually any insurance policy, it could have been ended at any time simply by stopping payment of the premiums. The downside to that is that there would almost certainly have been no payout at all. 

SevenOfNine

Pennylane said:

I am surprised. my Mum died last year and Phoenix were brilliant. Of all the organisations I had to deal with after she died, they were by far the most prompt and polite and I told them so.  They answered the phones promptly, dealt with my call sensitively and paid out very quickly. 

My condolences. I think maybe the question is what did they pay out in relation to how much your mum paid in.

OP hasn't exactly criticised the staff service, more the really small pay out given that she'd paid in more than 3 times that much over 25 years.