change of life insurance company

daisyfield

I took out life insurance with LV when I was 40. It has since changed to AIG, then recently, to Aviva. They say that my policy will remain the same and I have opted in for every type of cover including terminal illness, covid etc, to ensure my son gets the payout when I die one day. Anyone advise on if they actually do, or are they one of them companies that find unknown reasons not to pay out? Just want to make sure my son receives what he is due when the time comes.

user1977

Where have you heard about "them companies"?

daisyfield

well, my nan passed away in 2016 and she had a funeral plan. I know its not the same as life insurance, but when she died, we went to the funeral plan provider and they said we had to pay an additional £1000 because of inflation. i was asking about other companies because you hear stuff all the time about unknown clauses and things dont you

DullGreyGuy

daisyfield said:

I took out life insurance with LV when I was 40. It has since changed to AIG, then recently, to Aviva. They say that my policy will remain the same and I have opted in for every type of cover including terminal illness, covid etc, to ensure my son gets the payout when I die one day. Anyone advise on if they actually do, or are they one of them companies that find unknown reasons not to pay out? Just want to make sure my son receives what he is due when the time comes.

Payout rates on Life are very high 90%, some are like 99.7%. I would speculate a notable proportion of those declined claims will be attempted claims under the terminal illness cover as most policies dont have this cover in the last 12 months but naturally will pay out if you do die within the term but not if you die a few months after the policy ends. 

Critical Illness has a lower payout rate but then some claims are highly speculative and even a lay person could read the policy terms, the claim form and know it won't be accepted. 

daisyfield

Ok, do you think I should stick with my current provider. I have been paying into it every month for 13 years?

DullGreyGuy

daisyfield said:

Ok, do you think I should stick with my current provider. I have been paying into it every month for 13 years?

Depends on what your motivation to change is? 

Ultimately you can get a quote for starting a new policy to see how much it would cost to change but typically the older you are the more expensive it is. If for example you've upsized and taken on more debt most would leave their existing low premium policy in place and buy a second policy to top up the first (same company or another) which will be at a higher rate but a broker will quote for both top up or cancel and replace

Weighty1

Firstly, are you sure your policy was originally an LV one?  I ask because LV are still an insurance provider and during my 18-years as a broker I don't recall AIG buying out ANY other insurer.  They started life as Fortis and then re-branded as Ageas some years later, then AIG a few years after that and were recently bought out by Aviva, but at no point do I recall LV being involved.

Secondly, unless there has been a change of circumstances then there is zero need to change insurer.  Insurance companies re-branding, amalgamating, being taken over or simply ceasing to take on new applications has happened numerous times during my career (Friends Life, Friends Provident, Scottish Provident, Canada Life, UNUM, Old Mutual, AIG, Fortis, Ageas - none of these existing with their own branding any more) yet it's never caused me to change a clients policy since, as you inferred, the terms of the original plan are unaffected by these changes.

daisyfield

I received a letter from LV to say they were switching my policy over to AIG and again, an email recently when it was switched to Aviva.
Ok, really appreciate the advice. I will stay with them then. I am curious as to why its been switched twice though as, like you said, LV still exists?

dunstonh

daisyfield said:

I received a letter from LV to say they were switching my policy over to AIG and again, an email recently when it was switched to Aviva.
Ok, really appreciate the advice. I will stay with them then. I am curious as to why its been switched twice though as, like you said, LV still exists?

Many insurers have been selling unwanted books to other insurers.   LV wanted to exit that part of the market and that is why they sold it.  Then AIG wanted an exit from that part of the market and they sold it.

There have also been shareholder rumblings to get Aviva broken up as well, but it hasn't happened yet. Aviva is the last insurer in the UK that has its fingers in most areas of insurance and finance.

DullGreyGuy

daisyfield said:

I received a letter from LV to say they were switching my policy over to AIG and again, an email recently when it was switched to Aviva.
Ok, really appreciate the advice. I will stay with them then. I am curious as to why its been switched twice though as, like you said, LV still exists?

Sometimes its simple, AIG has decided to exit the Life market in the UK so sold the entity that used to write the Life business to Aviva.

Sometimes its complex and requires understanding of concepts... I may have a bunch of policies which I think is going to cost me £1,000,000 in claims inc admin costs. Under Solvency II I have to hold £1,150,000 of capital to ensure I can afford to pay those claims and incase my estimates are wrong. I can possibly sell those policies to another insurer by paying them £1,050,000 today which means I can release £100,000 of capital which I can use to fund something thats more important to me right now. 

The Pru for example sold a large book of policies a few years ago which allowed them to move some companies about within the group and then split the UK & Europe business out as a standalone unrelated company and allow Pru plc to focus on the Far East and Africa. They perceived they were a cash cow/safe investment in UK/EU but a higher risk/more exciting business in the developing areas. Shareholders were therefore torn as they really liked one part or the other not both together hence they split the company to better target shareholders