Can't increase life insurance cover, as told, mis-sold?

chris_h16

Hi
We bought life insurance and critical illness cover through our bank Lloyds and the insurance is with Scottish Widows.  We have had it for about 8 years now and runs for about another 10 years.  We didn't have a mortgage at the time and got mainly to leave money for our children if anything happened to us.  The Scottish Widows policy booklet that comes every year with the updated figures (we pay for increase with inflation option) states "cover that changes with you", so a bigger mortgage, smaller mortgage, house move etc.  We have now got a mortgage recently and always knew we could increase cover when we did get the mortgage.  When I've phoned Scottish Widows up, they can't do this.  The first advisor hasn't given a reason, just said no you can't do that, the 2nd advisor told me they used to but don't do that now.  So, do we have a case for being mis-sold as the policy isn't suitable for us as its not what we thought we were originally buying.  We now need to purchase elsewhere and obviously being older costs are higher.

Nearlyold

If were able to add additional cover to the existing policy the "top up" would usually be costed taking into account your current ages not the age you were when the original policy commenced.

Could you just keep your existing policy and take out new additional cover to meet your new overall requirements. Have you looked at any comparisons.

What is your original policy called? How long do you need the new cover for?

chris_h16

Hi
The product is Protection for Life.
We would need to extend it, and they said we can do that, but can't increase cover, we would have to take out another to cover the rest.  New cover would be for 35 years

Nearlyold

Can't really see what the problem is, you just need to compare extending the term for a further 35 years on the existing policy plus a new 35 year policy for the balance of the cover required against simply buying a new 35 year policy for the total required amount. Any extension/ extra cover on the old policy would have been priced on your ages today anyway - obviously a longer term carries a greater risk.

Go and see an adviser to go through the options but whatever you do DON'T cancel any existing cover before any new cover is accepted and in place. 

dunstonh

 So, do we have a case for being mis-sold as the policy isn't suitable for us as its not what we thought we were originally buying.  

No.  Virtually no life assurance plans could be increased without new underwriting or under the guaranteed insurability option, if they had any.   They would be priced on health and age at the point of the increase.  Not the point of the original sale.

We now need to purchase elsewhere and obviously being older costs are higher.

Buying it from the bank increased your cost to begin with.  If you are still in clean health, then a whole of market/IFA is likely to be cheaper than Lloyds. So, it may not be as much as you think.

Plus, you don't need to start again.  The original one covers you for family protection.  The new one, which would likely be a decreasing term assurance, would be for the mortgage.     Even if you could increase the old plan, it is the more expensive way to do it and unnecessary.