Wesleyan Whole of Life Policy Price Increase

ironwill2002

Hi All,

My wife and I took out a Whole of Life policy that included three elements.  Life, Critical Illness & Savings.  At the time of sale we were promised that the policy would be reviewed but that the increase would be small/reasonable over time.  We were also promised that it would create a nest egg for the future with the savings aspect.  

20 years on the value of the saving portion is £800, and they are have issued an increased premium or choice to lower cover.  The premium is 150% higher going from £60 per month to over £150 per month for the same cover.  Their justifications to date have been high level to say the least.  

My question for this forum is what can I do about it?  I feel disappointed and betrayed by Wesleyan but are there any routes I can take to either get them to re-evaluate the premium or give me my money back.

Many Thanks

dunstonh

 At the time of sale we were promised that the policy would be reviewed but that the increase would be small/reasonable over time.  

Nobody can promise what the increases would be small.   They could promise they would be reasonable. However, reasonable from your point of view may not match reasonable from their point of view.  i.e. the less you know about the economics behind the decision, the more likely you will feel it is unreasonable.   Whereas those with knowledge of those things would find the decisions reasoanble.

20 years on the value of the saving portion is £800, and they are have issued an increased premium or choice to lower cover.  The premium is 150% higher going from £60 per month to over £150 per month for the same cover.  Their justifications to date have been high level to say the least.  

These types of plans were going obsolete by the mid 90s.   So, buying one in 2003 is unusual.  (although direct to public sales did linger on as they offered lower consumer protections).

My question for this forum is what can I do about it?

Cancel it and get a modern plan (something similar to what you should have bought in the first place).  Obviously, that may not be possible if your health prevents it.

  I feel disappointed and betrayed by Wesleyan but are there any routes I can take to either get them to re-evaluate the premium or give me my money back.

They have no control over investment returns.  If investment returns fail to meet the target level required, then the premium goes up.  The amount it goes up by reflects the shortfall in the investment returns.  It's a factual calculation based on covering liabilities.  It isn't a figure plucked out of thin air.

When these plans are set up, you can usually select the target growth rate.  Often displayed as a low, medium or high.    The premium and sum assured are based on that selection.        For the first 10-15-20 years (depending on the version)  there are no review points.   So, if the insurer if out of pocket, it can do nothing about it until the first review point.   However, at that review point, it will look to bring it back in line by offering a choice of reduced sum assured or increased premium (or combination).

We were also promised that it would create a nest egg for the future with the savings aspect.  

They were never designed for that purpose and it would be a missale if anyone employed by them told you that.      The savings element is effectively there to cross subsidise the future higher cost of life assurance due to age.    If you did set the sum assured to low with a higher investment element, then you could build up a pot quicker but no-one should have been suggesting it suitable for creating a nest egg by 2003.     

ironwill2002

Thank you for your response Forumite, much appreciated.  The actual date of it starting was 2001.  I would like to find out if anyone else is in the same position.  I am not a financial expert as you say. So effectively they are immune to any mis-selling as the Sales person didn't write it all down and in my naivety we believed what the nice man said.

What I would say is that PPI claims had a much lower threshold of proof for mis-selling so I don't see why this is any different. 

Again I am £18k out of pocket, little or no change of replacing it with anything near, so my only option is to pay the £150 a month to keep the cover.  

Never going to trust a financial adviser again without the whole thing being recorded.

PS> Wesleyan do not use another insurance company to underwrite, so the premiums are up to them.  They are now seeking to get me to cancel the policy to get out of any payment, by increasing the costs to make it unaffordable, in my opinion.

ironwill2002

IF YOU HAVE BEEN CONNED INTO A WHOLE OF LIFE POLICY THAT BECOMES UNAFFORDABLE PLEASE GET IN TOUCH

dunstonh

Thank you for your response Forumite, much appreciated.  The actual date of it starting was 2001.  I would like to find out if anyone else is in the same position.  I am not a financial expert as you say. So effectively they are immune to any mis-selling as the Sales person didn't write it all down and in my naivety we believed what the nice man said.

Still obsolete if 2001.

Misselling would depend on how you bought it.   If you bought it via an adviser, then you get increased protection from misselling.  If you bought it without advice, then the chance to be missold is much lower as they are not advising you to buy it.     

Advice would result in a written report as to why they are recommending and any potential negatives or alternatives that may be as good or better.
Non-advice would just follow your instructions.

What I would say is that PPI claims had a much lower threshold of proof for mis-selling so I don't see why this is any different. 

There is no difference.  However, it is worth noting that advised PPI had a tiny uphold rate whereas most non-advised PPI was upheld. 

If you think it was missold, then you make a complaint on that basis.  However, if it was not an advised sale, then it would depend on the documentation issued.

Never going to trust a financial adviser again without the whole thing being recorded.

Up to this point, you hadn't said that a financial adviser was involved.   It is not the sort of product you would expect a financial adviser to have been recommending in 2001.  It's more like an insurance agent but even by 2001 you would not expect them to be offering it.  However, as you say a financial adviser was involved, you should have a report on the recommendation and reasons why.    What does that report say about the reasons why (and reasons why not)?

Are you sure it was advised?  (did you go through a factfind - e.g. assets, liabilities, employment history, income & expenditure etc)

PS> Wesleyan do not use another insurance company to underwrite, so the premiums are up to them.  They are now seeking to get me to cancel the policy to get out of any payment, by increasing the costs to make it unaffordable, in my opinion.

The premium alterations are controlled by them but the underlying investments are subject to market events.

Weighty1

ironwill2002 said:

Again I am £18k out of pocket, little or no change of replacing it with anything near, so my only option is to pay the £150 a month to keep the cover.  

This is only the same as you would be out of pocket if you had any other form of insurance which was not claimed upon.

In regards to them giving you your money back, as asked in the original post, why would they?  You've been provided life/critical illness insurance for the last 22-years and the policy HAS built up an investment element, albeit a small one.

I can understand you are annoyed/upset at this premium review but these sorts of reviews are not unusual on these whole of life type policies.  You'd be able to find numerous similar threads about premium increases if you went back over the years on here.

One question I'd be considering is whether you really need a whole of life policy?  Once you've retired and are reliant on your pension income do you really want or even need to be paying out a monthly premium for something which may not be necessary?

Obviously, you can put in a complaint if you wish and as Dunstonh has pointed out the success of this is likely to be the channel through which the plan was arranged but the main thing to consider is what sort of cover you actually need going forward and for many this is NOT a whole of life policy and for those for whom it IS the right option there are very few who would need critical illness cover beyond retirement.

IdrisJazz

Whole of life critical illness cover seems to be a flawed concept in my opinion. The cost of providing the cover will become so expensive eventually that there will be no funds left to cover it.

I wonder whether you have any option to remove the critical illness element and retain some life cover? I have worked with some similar products where this was an option.