Need advice on assurance policy options

Dan Steely

A life assurance policy review came in the post.

Option 1: To keep existing benefit for 5 years increase premiums by 150%.

Option 2: To keep existing benefit for 10 years increase premiums by 200%.

Option 3: To keep existing premiums for 5 years decrease benefit by 45%.

Option 4: To keep existing premiums and benefits for 7 months then policy will be cancelled.

Rounded figures.

I don't know what to make of this. I think I'm screwed. Have been paying equivalent of €300 per month for 16 years.

Broker at the time said this was the only policy he could get for me due to existing health condition. I wasn't aware of reviews.

Geuze

Is this policy pure insurance?

Or is it insurance + savings?

phormium

I'd be fairly sure somewhere in the read all about it stuff you got at the time the reviews were mentioned! It's quite common in lots of insurance policies. I have the same issue with a serious illness policy I have, I reduced the cover few years ago rather than up the payments, this years letter which I only got few days ago says that existing payment amount is enough to keep same cover for another 2 years. I think mine has an end date of 2026 or thereabouts so I'll just let it run it's course.

It's a problem when you dont' have a fixed premium/benefit/term on a policy but if that was all you could get at the time! Has it served it's purpose? Do you still even need it at this stage, still got mortgage o/s or dependants? Have you spoken to the broker again to see if all is still the same and your health issues would still mean a loading at this stage.

Dan Steely

https://www.boards.ie/discussion/comment/122199102#Comment_122199102

Life assurance only.

Geuze

Is it term insurance, with a defined start and end-date?

Dan Steely

https://www.boards.ie/discussion/comment/122199154#Comment_122199154

I've about 100k left on mortgage, and dependants. Also seriously ill with a not great prognosis.

Have paid around 55k so far. Benefit of 270k on death. To maintain this they want to increase premiums from 300pm to 750pm for 5 years, 900pm for 10 years. To keep premiums at 300 they will reduce the benefit by 120k.

Broker is gone, correspondence is with the insurance company now.

Buddy Bubs

Is your mortgage and additional life insurance all combined in the one policy?

It's really designed to be there when you need it like any insurance. But sounds like you do still need it.

Reduce your benefits to suit your needs and your pocket....how long will your dependants be dependant on you financially? There's a fair bit of ground between 300 and 750 a month if you can afford it

Dan Steely

https://www.boards.ie/discussion/comment/122199266#Comment_122199266

Mortgage and insurance are separate.

Looks like I will have to take the 120k hit. Can't afford 450pm. It will cover the mortgage but will leave next to nothing for my family.

Buddy Bubs

https://www.boards.ie/discussion/comment/122199282#Comment_122199282

Mortgage protection policy and life insurance policy I meant. It sounds like it's all in one policy for you.

Here's something to think about.....your mortgage balance will be dropping as the years go by which will leave more left over if clearing the mortgage.

Also, do they have to clear the mortgage with it? Is the policy assigned to the bank?

Also, I don't know how bad your prognosis is but if it's very bad and it looks like you are dying, can you afford not to pay the additional premium and keep high benefits? Would it be worth paying for the high payout? Work out that likelihood yourself.

Sorry to hear about your troubles also, that's the main thing and fair play to you thinking of your family.

phormium

That's unfortunate scenario so, sorry.

Dan Steely

https://www.boards.ie/discussion/comment/122199301#Comment_122199301

The insurance policy is not connected to the mortgage in any way. Don't have mortgage protection.

60 x 150 = €9000 extra to not lose 120k. I will be long gone in 5 years! I can't really afford it but the best option for me is obviously the 450pm and keep the 270k cover.

Dan Steely

Jeez this is doing my head in… got my calculations all wrong. Its 450pm extra not 150 so cost to keep exting benefits is 27k extra, 45k in total.

Geuze

https://www.boards.ie/discussion/comment/122199773#Comment_122199773

If you have a mortgage, you should have a mortgage protection policy.

Unless you were unable to get an MPP at the start of the mortgage?

phormium

https://www.boards.ie/discussion/comment/122200256#Comment_122200256

Not necessarily so, any policy covering your life for the required time and amount can be used to fit the 'mortgage protection' requirement of lender. Many people have different types of policy, once it covers what is required that will do regardless of the name it's marketed under.

Geuze

Yes, but what you describe means the life policy would be assigned to the lender.

That does not seem to be the case here.

phormium

https://www.boards.ie/discussion/comment/122202553#Comment_122202553

Not always the case either that they are assigned, I spent a long time in banking, in the early years policies for mortgages were assigned, then they stopped that process and you only had to produce a policy that we took a copy of and then again after 2008 'problems' they went back to assigning policies. The Consumer credit act only says the mortgage holder must have a policy in place, it's not obligatory for the bank to assign it but obviously it's best practice as then they know if they are being paid or not.

I think that is what came to light after 2008 just how many policies had lapsed! That said they may still have lapsed even if assigned if the holder hadn't the money to pay them.

Henry Ford III

https://www.boards.ie/discussion/comment/122199216#Comment_122199216

There are plenty of discount intermediaries who will execute but won't provide advice.

Henry Ford III

Closing this for review. The amount of guesswork is mind boggling.

Henry Ford III

So I've had a look at this since and would comment as follows:-

1/. The only type of reviewable life assurance policies are whole life, unit linked policies. These are complicated vehicles and ALL have an investment element. The idea is that the investment fund pays for the for the difference between sum assured and the fund value. Premiums can be pitched at any level. The higher the better from an investment perspective. If a low premium is selected the reviews are likely to be expensive.

2/. All life policies have similar underwriting, so the advisor should/would have been able to offer simple term assurance with a fixed premium from the outset. If that was all that was needed I'd be asking why you ended up with the policy you have OP.

3/. Any Broker can provide an execution only service. Recommending a specific one repeatedly for something that anyone can do isn't acceptable. I've removed that comment and ask that it's not repeated here. Gueze please take note.

4/. OP it sounds like you got poor advice and I'm sorry you are in this nasty position now. I'd consider making a complaint to the Ombudsman if I were you.

Henry Ford III

https://www.boards.ie/discussion/2058353735/need-advice-on-assurance-policy-options

That last paragraph is totally incorrect. Term assurance underwriting is the same as the policy you took out. I suspect the higher premium meant higher commission, and that was the only consideration.

Dan Steely

To be honest I'm devastated at this, particularly the timing.

I don't have a copy of the original policy document, it was lost in a house move.

The salesman (might have been a company salesman) is no longer in the business.

There was a previous review, think maybe after 10 years. The increase was modest compared to what they are looking for now and I was in the throws of cancer treatment at the time so just signed for whatever it was to keep the same benefit.

As I said, I knew nothing about a review as I wasn't told of this before purchase. I know it will be in the t&c but I think that regular reviews like this define the policy so should be explicit.

I don't really have the energy now, or time to be perfectly honest, to get into a fight with them over this. How is the ombudsman to deal with?

Geuze

So I've had a look at this since and would comment as follows:-

1/. The only type of reviewable life assurance policies are whole life, unit linked policies. These are complicated vehicles and ALL have an investment element. The idea is that the investment fund pays for the for the difference between sum assured and the fund value. Premiums can be pitched at any level. The higher the better from an investment perspective. If a low premium is selected the reviews are likely to be expensive.

Odd, the OP stated that the policy is insurance only, not insurance+savings. I suspect you are correct, and that the OP is missing some information.

Jim2007

https://www.boards.ie/discussion/comment/122208987#Comment_122208987

Well what would be your complaint to the ombudsman? You signed up to this policy, you either failed to familiarize yourself with the policy conditions or have forgotten them and you seem to have lost or misplaced the policy's T&C, so you don't even know if the review terms were explicit in the policy or not (I expect they were). And of course you already have had at least one review so far. So I don't see what the ombudsman would have to work with to give you the outcome you desire. If you want to go down the road of claiming that you did not have the mental capacity to enter into the contract etc…. then that goes way beyond a simple complaint to the ombudsman and I would very strongly advise you to seek legal advice before you do as the outcome might not be to your liking.

The J Stands for Jay

https://www.boards.ie/discussion/comment/122209282#Comment_122209282

This would be a standard mis-selling case. Of OP can establish that the intermediary didn't sell the product that met OP's needs, it'd be a pretty clear case. There may however be an issue if the intermediary is no longer in business

Jim2007

https://www.boards.ie/discussion/comment/122209324#Comment_122209324

There is no evidence of that being the case, the OP has had he policy for a long time and has already gone through at least one review. The time to raise the mis-selling flag is gone at this point, you'd need a very good legal team to succeed on that one at this stage and the remedy if it was successful might not be what the OP wants because the chance of getting all the benefits without the obligations of the contract are in question.

The J Stands for Jay

https://www.boards.ie/discussion/comment/122209481#Comment_122209481

"Complaints must be made within 3 years from the date you became aware, or you should reasonably have become aware, of the conduct complained of.

• The conduct complained of must have occurred on or after 1 Jan 2002 for a complaint about a long-term financial service, and the long-term financial service must not have expired more than 6 years before the date of the complaint to the FSPO"

Buddy Bubs

Not to make light of the OPs situation, but in this case the illness sounds very severe, would the best course of action be figure out how to keep paying it? It may not be for a very long time either.

Could be seen as the most important bill you have now OP. More important that paying your mortgage I dare say. Do a deal with banks for interest only or just pay what you can off mortgage to keep this insurance going.

Credit rating be damned, I'd be looking after my family rather than the banks here.

Jim2007

https://www.boards.ie/discussion/comment/122209504#Comment_122209504

It is not a question of time, it is a question of evidence and a strategy. The OP has been through the process already, so claim that he was unaware is going to be very difficult and the only difference this time is the outcome was not favourable. The ombudsman is part of a judicial system and even if he got a favourable outcome it would be appealed because it would open the flood gates for everyone that did not like the terms of their policy. This is why I said they need proper legal council to go down this route, because it will not a simple complaint.

Dan Steely

What's involved in going interest only on a mortgage? Is it just an instruction or would they need to convincing? Would they be amenable to my situation as outlined here?

Roughly, what would a typical reduction be per €1000 at 2.4%, currently fixed. If it would be a substantial reduction I would consider that.

Buddy Bubs

https://www.boards.ie/discussion/comment/122211128#Comment_122211128

I've no idea Dan, just one of many options to help your monthly cashflow to keep paying the insurance and guarantee a payout.

It's a huge decision, and mortgage would still have to be paid out of the insurance as your 100k won't be falling.

It's a decision for you and family, sit down and do a budget for everything, maybe with a planner or even a trusted friend, see what the best course of action is for you.

I doubt your working if you are very sick so there may not be huge options.

But again, best of luck