@HAYSIE it looks like you have a Whole of Life policy but on the 'life of another' basis. i.e. your wife is the policy owner and you are the life assured. As you get older the cost of life insurance increases (as you're more likely to die, obviously), so if the investment performance of the fund value built up by the plan isn't increasing by as much as needed then the premiums will have to increase to maintain the cover. I presume this was explained to you when the plan was taken out, it certainly should have been.
There were a few 'guaranteed premium' WOL policies back in th day, these are now excellent value for the older clients who still have them but would have been much more expensive at the start.
Had it been explained at the start I wouldnt have done it. Had I been aware it wasnt my policy, I wouldnt have done it. I took it out with a view to making sure my wife was ok, if something happened to me. I just wanted a policy that left my wife a reasonable sum on my death.
It just seems a ridiculously stupid policy to me. Starting off at £150 per month, and increasing to £1500 per month. I think the final figure I looked at was when I reached 89. It is a catch 22, you either pay the increased premiums, or the cover is reduced. If I remember correctly, if I live until my late eighties, then the cover will be less than the premiums, assuming I dont increase them.
The crooked bit in my view was that they didnt send me a projection for 10 years. If they had shown it to me day 1, I wouldnt have done it. Who would?
@HAYSIE it looks like you have a Whole of Life policy but on the 'life of another' basis. i.e. your wife is the policy owner and you are the life assured. As you get older the cost of life insurance increases (as you're more likely to die, obviously), so if the investment performance of the fund value built up by the plan isn't increasing by as much as needed then the premiums will have to increase to maintain the cover. I presume this was explained to you when the plan was taken out, it certainly should have been.
There were a few 'guaranteed premium' WOL policies back in th day, these are now excellent value for the older clients who still have them but would have been much more expensive at the start.
Had it been explained at the start I wouldnt have done it. Had I been aware it wasnt my policy, I wouldnt have done it. I took it out with a view to making sure my wife was ok, if something happened to me. I just wanted a policy that left my wife a reasonable sum on my death.
It just seems a ridiculously stupid policy to me. Starting off at £150 per month, and increasing to £1500 per month. I think the final figure I looked at was when I reached 89. It is a catch 22, you either pay the increased premiums, or the cover is reduced. If I remember correctly, if I live until my late eighties, then the cover will be less than the premiums, assuming I dont increase them.
The crooked bit in my view was that they didnt send me a projection for 10 years. If they had shown it to me day 1, I wouldnt have done it. Who would?
By which time I had paid in 18k, and was able to cash it in for £500.
@HAYSIE it looks like you have a Whole of Life policy but on the 'life of another' basis. i.e. your wife is the policy owner and you are the life assured. As you get older the cost of life insurance increases (as you're more likely to die, obviously), so if the investment performance of the fund value built up by the plan isn't increasing by as much as needed then the premiums will have to increase to maintain the cover. I presume this was explained to you when the plan was taken out, it certainly should have been.
There were a few 'guaranteed premium' WOL policies back in th day, these are now excellent value for the older clients who still have them but would have been much more expensive at the start.
Had it been explained at the start I wouldnt have done it. Had I been aware it wasnt my policy, I wouldnt have done it. I took it out with a view to making sure my wife was ok, if something happened to me. I just wanted a policy that left my wife a reasonable sum on my death.
It just seems a ridiculously stupid policy to me. Starting off at £150 per month, and increasing to £1500 per month. I think the final figure I looked at was when I reached 89. It is a catch 22, you either pay the increased premiums, or the cover is reduced. If I remember correctly, if I live until my late eighties, then the cover will be less than the premiums, assuming I dont increase them.
The crooked bit in my view was that they didnt send me a projection for 10 years. If they had shown it to me day 1, I wouldnt have done it. Who would?
I presume that you did this directly with the insurer then rather than via a financial adviser? One of the reasons your premiums are increasing now to maintain the cover (or you can keep the premiums the same and accept the drop in cover level) is that the investment performance hasn't been as good as needed to maintain the cover. Ironically you are quite happy with an article that quotes double digit returns per annum over the next 30 years in order to justify the exceptional figures projected. Can you see how this article could lead to many unhappy customers if they believe the figures quoted and things didn't quite work out as well? With WOL you will usually get to a point where the fund value starts to decrease each year and/or the premiums increase massively to maintain cover, after all it is a policy that WILL pay out if you keep paying the premiums, unlike term assurances which have a specific end date and are therefore usually very unlikley to pay out. Usually there is a point where clients decide to cash the policy in and take the surrender value rather than keep paying ever increasing premiums. I have a WOL life and critical illness policy, the cover has just reduced from about £220,000 to £100,000 (I elected NOT to increase the premiums to maintain the cover), the policy has pretty much done its job now though, taken out when I was in my 30's it has provided financial security for the last 28 years, I haven't died or suffered a critical illness so it hasn't paid out, but it's done its job. My financial situation is far more secure now than it was back then so I'm ok with the drop in cover.
@HAYSIE it looks like you have a Whole of Life policy but on the 'life of another' basis. i.e. your wife is the policy owner and you are the life assured. As you get older the cost of life insurance increases (as you're more likely to die, obviously), so if the investment performance of the fund value built up by the plan isn't increasing by as much as needed then the premiums will have to increase to maintain the cover. I presume this was explained to you when the plan was taken out, it certainly should have been.
There were a few 'guaranteed premium' WOL policies back in th day, these are now excellent value for the older clients who still have them but would have been much more expensive at the start.
Had it been explained at the start I wouldnt have done it. Had I been aware it wasnt my policy, I wouldnt have done it. I took it out with a view to making sure my wife was ok, if something happened to me. I just wanted a policy that left my wife a reasonable sum on my death.
It just seems a ridiculously stupid policy to me. Starting off at £150 per month, and increasing to £1500 per month. I think the final figure I looked at was when I reached 89. It is a catch 22, you either pay the increased premiums, or the cover is reduced. If I remember correctly, if I live until my late eighties, then the cover will be less than the premiums, assuming I dont increase them.
The crooked bit in my view was that they didnt send me a projection for 10 years. If they had shown it to me day 1, I wouldnt have done it. Who would?
I presume that you did this directly with the insurer then rather than via a financial adviser?
Not true.
One of the reasons your premiums are increasing now to maintain the cover (or you can keep the premiums the same and accept the drop in cover level) is that the investment performance hasn't been as good as needed to maintain the cover.
The projection they sent me in 2020, covered the premiums for the next 30 years. I thought that if I continued to pay the premiums until I died, I would get the promised cover. I was told that it wasnt an investment.
Ironically you are quite happy with an article that quotes double digit returns per annum over the next 30 years in order to justify the exceptional figures projected.
What I said was that the article may have sold me on the concept of a SIPP. Although they could have done this equally as well if they had quoted an 8% growth.
Can you see how this article could lead to many unhappy customers if they believe the figures quoted and things didn't quite work out as well?
I think that people regard any figures that the financial services industry quote with scepticism. I suppose you could argue about the likelihood of 8% growth over 30 years.
With WOL you will usually get to a point where the fund value starts to decrease each year and/or the premiums increase massively to maintain cover, after all it is a policy that WILL pay out if you keep paying the premiums, unlike term assurances which have a specific end date and are therefore usually very unlikley to pay out. Usually there is a point where clients decide to cash the policy in and take the surrender value rather than keep paying ever increasing premiums.
This was not made clear to me. I thought it was a swings, and roundabouts policy. That they would win on some, and lose on others.
I have a WOL life and critical illness policy, the cover has just reduced from about £220,000 to £100,000 (I elected NOT to increase the premiums to maintain the cover), the policy has pretty much done its job now though, taken out when I was in my 30's it has provided financial security for the last 28 years, I haven't died or suffered a critical illness so it hasn't paid out, but it's done its job. My financial situation is far more secure now than it was back then so I'm ok with the drop in cover.
That was not the purpose in my case. I was looking to give my wife a little more financial security after I was dead. My policy has probably made the premiums unaffordable at the time I am most likely to die.
So your wife has complained to the original adviser, who has rejected the claim and then she has also referred the claim to the ombudsman who has also found no fault? It certainly seems that the limitations of the policy were not full explained to you at the time you took the policy out, in which case a complaint would normally be upheld.
So your wife has complained to the original adviser, who has rejected the claim and then she has also referred the claim to the ombudsman who has also found no fault? It certainly seems that the limitations of the policy were not full explained to you at the time you took the policy out, in which case a complaint would normally be upheld.
I had been using a financial adviser that was reccomemded to me by accountant. I had done a SIPP through Standard Life, and some ISAs for me and my wife through Skandia.
Then something really strange happened.
He had stated during one of our meetings that he would love to spend the New Year in Scotland one year. I said that I could arrange this FoC, and that he should perhaps check with his wife, and come back to me if he wanted me to book it. He did, and asked me to book it. I booked a four bedroomed lodge for his family over New Year. He was a no show. He didnt phone to cancel the booking, they just didnt show up. He didnt phone me to apologise, or contact me in any way. At least, not until he sent me a letter some 15 years later. The company I worked for probably could have got a grand for a New year booking for a week in a 4 bedroomed unit. I have not spoken to him to this day. It seemed really weird, as I was paying a grand per month into the SIPP at the time, and he was earning a few quid off me.
We had discussed a life insurance policy, and I felt I was ready to take one out. This was maybe 3 or 4 years later. I phoned Standard Life, and they sent a guy out to see me. I saw this guy once for maybe a couple of hours. My wife was not involved in any way, other than maybe a signature. She wasnt involved at all, but I guess she must have signed, as it turned out to be her policy. He did the policy through Skandia. My wife wasnt working and had no income at the time. Yet it was her policy. Skandia, became Old Mutual, and then ReAssure.
By the time I got the premium projections, I had moved both of our ISA account to Standard Life/Abrdn. I had been allocated an office based financial adviser. He gave me one phone call per year, to go through my account. So when I received the projection, I complained to Standard Life/Abrdn. They were happy to deal with me over the complaint. However when I contacted ReAssure over the projection, they refused to speak to me as it was my wifes account. Standard Life did not uphold my complaint. I am not sure whether I took it to the Ombudsman. It was a little difficult at this stage as I had an ongoing relationship with Standard Life. My SIPP had grown, and we had 2 substantial ISA accounts with them, in additional to the life insurance policy that I had done through them.
When I received the projection, I felt that it was a ridiculous policy. This was 10 years after I had taken the policy out. If you plotted a graph using the projection. There would be a point where the premiums would become unaffordable. There would also be a point where my contributions would exceed the payout. Had I seen a projection prior to taking the policy out, I definitely wouldnt have.
I was completely unaware that the monthly payments would increase, or the extent of the increases. I was also unaware that the cover would be reduced, or the extent of the reductions. I will be forced to cancel the policy at some point. The question is when rather than if.
So your wife has complained to the original adviser, who has rejected the claim and then she has also referred the claim to the ombudsman who has also found no fault? It certainly seems that the limitations of the policy were not full explained to you at the time you took the policy out, in which case a complaint would normally be upheld.
I had been using a financial adviser that was reccomemded to me by accountant. I had done a SIPP through Standard Life, and some ISAs for me and my wife through Skandia.
Then something really strange happened.
He had stated during one of our meetings that he would love to spend the New Year in Scotland one year. I said that I could arrange this FoC, and that he should perhaps check with his wife, and come back to me if he wanted me to book it. He did, and asked me to book it. I booked a four bedroomed lodge for his family over New Year. He was a no show. He didnt phone to cancel the booking, they just didnt show up. He didnt phone me to apologise, or contact me in any way. At least, not until he sent me a letter some 15 years later. The company I worked for probably could have got a grand for a New year booking for a week in a 4 bedroomed unit. I have not spoken to him to this day. It seemed really weird, as I was paying a grand per month into the SIPP at the time, and he was earning a few quid off me.
It is certainly frowned upon to receive any gifts from clients and any such gifts have to be declared. I was once given £300 by a client 'to take your wife out for a meal and a show' after I had helped with the financial side of things when her husband died. I declared it to my compliance department at the time and they stated that it was right on the limit of what could be accepted. No idea why your adviser acted like he did in this case, not acceptable at all.
We had discussed a life insurance policy, and I felt I was ready to take one out. This was maybe 3 or 4 years later. I phoned Standard Life, and they sent a guy out to see me. I saw this guy once for maybe a couple of hours. My wife was not involved in any way, other than maybe a signature. She wasnt involved at all, but I guess she must have signed, as it turned out to be her policy. He did the policy through Skandia. My wife wasnt working and had no income at the time. Yet it was her policy. Skandia, became Old Mutual, and then ReAssure.
By the time I got the premium projections, I had moved both of our ISA account to Standard Life/Abrdn. I had been allocated an office based financial adviser. He gave me one phone call per year, to go through my account. So when I received the projection, I complained to Standard Life/Abrdn. They were happy to deal with me over the complaint. However when I contacted ReAssure over the projection, they refused to speak to me as it was my wifes account. Standard Life did not uphold my complaint. I am not sure whether I took it to the Ombudsman. It was a little difficult at this stage as I had an ongoing relationship with Standard Life. My SIPP had grown, and we had 2 substantial ISA accounts with them, in additional to the life insurance policy that I had done through them.
When I received the projection, I felt that it was a ridiculous policy. This was 10 years after I had taken the policy out. If you plotted a graph using the projection. There would be a point where the premiums would become unaffordable. There would also be a point where my contributions would exceed the payout. Had I seen a projection prior to taking the policy out, I definitely wouldnt have.
I was completely unaware that the monthly payments would increase, or the extent of the increases. I was also unaware that the cover would be reduced, or the extent of the reductions. I will be forced to cancel the policy at some point. The question is when rather than if.
Again it looks like this wasn't explained correctly to you when you and your wife took the policy out. 'Life of another' is an alternative to writing a policy in trust, there are pros and cons of each option which should have explained to you, along with how whole of life policies work, none of what you have experienced with the policy should have been a surprise.
When Standard Life declined your complaint they will have given you the option to then take it to the Ombudsman. This would have cost Standard Life a fee (currently £650), even if the Ombudsman found in their favour.
So your wife has complained to the original adviser, who has rejected the claim and then she has also referred the claim to the ombudsman who has also found no fault? It certainly seems that the limitations of the policy were not full explained to you at the time you took the policy out, in which case a complaint would normally be upheld.
I had been using a financial adviser that was reccomemded to me by accountant. I had done a SIPP through Standard Life, and some ISAs for me and my wife through Skandia.
Then something really strange happened.
He had stated during one of our meetings that he would love to spend the New Year in Scotland one year. I said that I could arrange this FoC, and that he should perhaps check with his wife, and come back to me if he wanted me to book it. He did, and asked me to book it. I booked a four bedroomed lodge for his family over New Year. He was a no show. He didnt phone to cancel the booking, they just didnt show up. He didnt phone me to apologise, or contact me in any way. At least, not until he sent me a letter some 15 years later. The company I worked for probably could have got a grand for a New year booking for a week in a 4 bedroomed unit. I have not spoken to him to this day. It seemed really weird, as I was paying a grand per month into the SIPP at the time, and he was earning a few quid off me.
It is certainly frowned upon to receive any gifts from clients and any such gifts have to be declared. I was once given £300 by a client 'to take your wife out for a meal and a show' after I had helped with the financial side of things when her husband died. I declared it to my compliance department at the time and they stated that it was right on the limit of what could be accepted. No idea why your adviser acted like he did in this case, not acceptable at all.
We had discussed a life insurance policy, and I felt I was ready to take one out. This was maybe 3 or 4 years later. I phoned Standard Life, and they sent a guy out to see me. I saw this guy once for maybe a couple of hours. My wife was not involved in any way, other than maybe a signature. She wasnt involved at all, but I guess she must have signed, as it turned out to be her policy. He did the policy through Skandia. My wife wasnt working and had no income at the time. Yet it was her policy. Skandia, became Old Mutual, and then ReAssure.
By the time I got the premium projections, I had moved both of our ISA account to Standard Life/Abrdn. I had been allocated an office based financial adviser. He gave me one phone call per year, to go through my account. So when I received the projection, I complained to Standard Life/Abrdn. They were happy to deal with me over the complaint. However when I contacted ReAssure over the projection, they refused to speak to me as it was my wifes account. Standard Life did not uphold my complaint. I am not sure whether I took it to the Ombudsman. It was a little difficult at this stage as I had an ongoing relationship with Standard Life. My SIPP had grown, and we had 2 substantial ISA accounts with them, in additional to the life insurance policy that I had done through them.
When I received the projection, I felt that it was a ridiculous policy. This was 10 years after I had taken the policy out. If you plotted a graph using the projection. There would be a point where the premiums would become unaffordable. There would also be a point where my contributions would exceed the payout. Had I seen a projection prior to taking the policy out, I definitely wouldnt have.
I was completely unaware that the monthly payments would increase, or the extent of the increases. I was also unaware that the cover would be reduced, or the extent of the reductions. I will be forced to cancel the policy at some point. The question is when rather than if.
Again it looks like this wasn't explained correctly to you when you and your wife took the policy out. 'Life of another' is an alternative to writing a policy in trust, there are pros and cons of each option which should have explained to you, along with how whole of life policies work, none of what you have experienced with the policy should have been a surprise.
When Standard Life declined your complaint they will have given you the option to then take it to the Ombudsman. This would have cost Standard Life a fee (currently £650), even if the Ombudsman found in their favour.
I havent a clue why he acted as he did. He seemed like a nice bloke. He could have phoned the company to cancel, and everything would have been fine. He could have phoned me to apologise, and everything would have been fine. I realise that sometimes the unforseen happens, and cant be helped. As far as the policy is concerned, I was completely in the dark.
I just cant see any sense in taking out a policy like this. I am able to afford the payments now, as I have only increased them once. There will definitely come a point where the premiums are unaffordable, and I will have to cancel the policy. Prior to reaching that point, I will reach a stage that the cover will have been reduced so much that it will be less than I have paid in. I dont intend to increase the premiums any further. So as time goes by, I will have contributed more, and the cover is further reduced. Why would anyone possibly buy a similar policy. It was only of any value if I had died within ten years of taking it out.
I think we can agree that the service provided your adviser wasn't as good as it should have been, on a personal level as well as a professional one.
It looks like your policy was set up at or near 'maximum cover'. This means that the life cover and premium level were only guaranteed for 10 years, at which point the plan would be reviewed with the premiums having to increase or the cover would decrease, at maximum cover level these changes can be quite large, as you have seen. These reviews then happen every 5 years or even yearly over certain ages.
A WOL policy on 'standard cover' would have much smaller changes at the reviews or even no change at all but simply because the initial premium level would be much higher for the same sum assured and this would lead to a bigger pot of money being built up within the plan. It is the likelihood of this pot of money being able to support the life cover deductions that dictates the premium levels going forward.
They are excellent ways of providing life cover when the term of the need isn't known. As an alternative for example, if you need to cover a repayment mortgage debt, then you use a mortgage decreasing term assurance. This plan covers the amount outstanding on a mortgage and ends when the mortgage ends. Generally the premiums don't change during the term of the policy. But you get nothing back when the policy ends and there is generally no option to extend the cover. They are generally much cheaper than whole of life policies, certainly those set up on a standard cover level.
IF your wife's financial situation is secure in the event of your death then it could be argued that she no longer needs the cover, however I don't know your situation so certainly couldn't advise that you cancel the plan. There's always the obvious risk with giving that advice!
One thing I can agree on is that all insurance is a waste of money IF YOU DON'T HAVE TO CLAIM. Car insurance for example, a complete waste of money if you never make a claim and many people wouldn't take it out if it wasn't a legal requirement to do so.
On the other side of the coin is those that make a claim, insurance policies are then excellent value. My other half, for example, took out a critical illness policy nearly 30 years ago. She was in her early 30's, non smoker, non drinker, fit, sporty, not overweight, in fact a very, very low risk. She got cancer, within two years of taking the plan out. From memory she paid less than £500 in total premiums into that plan over the two years before the claim. It paid out £170,000. Not all insurance is bad value!
So your wife has complained to the original adviser, who has rejected the claim and then she has also referred the claim to the ombudsman who has also found no fault? It certainly seems that the limitations of the policy were not full explained to you at the time you took the policy out, in which case a complaint would normally be upheld.
I had been using a financial adviser that was reccomemded to me by accountant. I had done a SIPP through Standard Life, and some ISAs for me and my wife through Skandia.
Then something really strange happened.
He had stated during one of our meetings that he would love to spend the New Year in Scotland one year. I said that I could arrange this FoC, and that he should perhaps check with his wife, and come back to me if he wanted me to book it. He did, and asked me to book it. I booked a four bedroomed lodge for his family over New Year. He was a no show. He didnt phone to cancel the booking, they just didnt show up. He didnt phone me to apologise, or contact me in any way. At least, not until he sent me a letter some 15 years later. The company I worked for probably could have got a grand for a New year booking for a week in a 4 bedroomed unit. I have not spoken to him to this day. It seemed really weird, as I was paying a grand per month into the SIPP at the time, and he was earning a few quid off me.
It is certainly frowned upon to receive any gifts from clients and any such gifts have to be declared. I was once given £300 by a client 'to take your wife out for a meal and a show' after I had helped with the financial side of things when her husband died. I declared it to my compliance department at the time and they stated that it was right on the limit of what could be accepted. No idea why your adviser acted like he did in this case, not acceptable at all.
We had discussed a life insurance policy, and I felt I was ready to take one out. This was maybe 3 or 4 years later. I phoned Standard Life, and they sent a guy out to see me. I saw this guy once for maybe a couple of hours. My wife was not involved in any way, other than maybe a signature. She wasnt involved at all, but I guess she must have signed, as it turned out to be her policy. He did the policy through Skandia. My wife wasnt working and had no income at the time. Yet it was her policy. Skandia, became Old Mutual, and then ReAssure.
By the time I got the premium projections, I had moved both of our ISA account to Standard Life/Abrdn. I had been allocated an office based financial adviser. He gave me one phone call per year, to go through my account. So when I received the projection, I complained to Standard Life/Abrdn. They were happy to deal with me over the complaint. However when I contacted ReAssure over the projection, they refused to speak to me as it was my wifes account. Standard Life did not uphold my complaint. I am not sure whether I took it to the Ombudsman. It was a little difficult at this stage as I had an ongoing relationship with Standard Life. My SIPP had grown, and we had 2 substantial ISA accounts with them, in additional to the life insurance policy that I had done through them.
When I received the projection, I felt that it was a ridiculous policy. This was 10 years after I had taken the policy out. If you plotted a graph using the projection. There would be a point where the premiums would become unaffordable. There would also be a point where my contributions would exceed the payout. Had I seen a projection prior to taking the policy out, I definitely wouldnt have.
I was completely unaware that the monthly payments would increase, or the extent of the increases. I was also unaware that the cover would be reduced, or the extent of the reductions. I will be forced to cancel the policy at some point. The question is when rather than if.
Again it looks like this wasn't explained correctly to you when you and your wife took the policy out. 'Life of another' is an alternative to writing a policy in trust, there are pros and cons of each option which should have explained to you, along with how whole of life policies work, none of what you have experienced with the policy should have been a surprise.
When Standard Life declined your complaint they will have given you the option to then take it to the Ombudsman. This would have cost Standard Life a fee (currently £650), even if the Ombudsman found in their favour.
I havent a clue why he acted as he did. He seemed like a nice bloke. He could have phoned the company to cancel, and everything would have been fine. He could have phoned me to apologise, and everything would have been fine. I realise that sometimes the unforseen happens, and cant be helped. As far as the policy is concerned, I was completely in the dark.
I just cant see any sense in taking out a policy like this. I am able to afford the payments now, as I have only increased them once. There will definitely come a point where the premiums are unaffordable, and I will have to cancel the policy. Prior to reaching that point, I will reach a stage that the cover will have been reduced so much that it will be less than I have paid in. I dont intend to increase the premiums any further. So as time goes by, I will have contributed more, and the cover is further reduced. Why would anyone possibly buy a similar policy. It was only of any value if I had died within ten years of taking it out.
This got me thinking, so I dug out this years statement. The surrender value last year was £875.33. This year it is £512.64. This is after paying £174.84 per month. It was originally £150. The cover has been reduced from £150k to £90k.
I think we can agree that the service provided your adviser wasn't as good as it should have been, on a personal level as well as a professional one.
It looks like your policy was set up at or near 'maximum cover'. This means that the life cover and premium level were only guaranteed for 10 years, at which point the plan would be reviewed with the premiums having to increase or the cover would decrease, at maximum cover level these changes can be quite large, as you have seen. These reviews then happen every 5 years or even yearly over certain ages.
A WOL policy on 'standard cover' would have much smaller changes at the reviews or even no change at all but simply because the initial premium level would be much higher for the same sum assured and this would lead to a bigger pot of money being built up within the plan. It is the likelihood of this pot of money being able to support the life cover deductions that dictates the premium levels going forward.
They are excellent ways of providing life cover when the term of the need isn't known. As an alternative for example, if you need to cover a repayment mortgage debt, then you use a mortgage decreasing term assurance. This plan covers the amount outstanding on a mortgage and ends when the mortgage ends. Generally the premiums don't change during the term of the policy. But you get nothing back when the policy ends and there is generally no option to extend the cover. They are generally much cheaper than whole of life policies, certainly those set up on a standard cover level.
IF your wife's financial situation is secure in the event of your death then it could be argued that she no longer needs the cover, however I don't know your situation so certainly couldn't advise that you cancel the plan. There's always the obvious risk with giving that advice!
One thing I can agree on is that all insurance is a waste of money IF YOU DON'T HAVE TO CLAIM. Car insurance for example, a complete waste of money if you never make a claim and many people wouldn't take it out if it wasn't a legal requirement to do so.
On the other side of the coin is those that make a claim, insurance policies are then excellent value. My other half, for example, took out a critical illness policy nearly 30 years ago. She was in her early 30's, non smoker, non drinker, fit, sporty, not overweight, in fact a very, very low risk. She got cancer, within two years of taking the plan out. From memory she paid less than £500 in total premiums into that plan over the two years before the claim. It paid out £170,000. Not all insurance is bad value!
I appreciate that. I was involved in sales for most of my working life. I would challenge the best sales people that I have ever known to sell just one of these policies in their whole lives, if they fully informed the prospective customer.
Not many life companies offer whole of life contracts now. They still have a place though, for example insuring against an inheritance tax liability on a joint life second death basis and written in trust to the beneficiaries.
I can't remember the last time I actually had clients take one out though, despite occasionally recommending them for IHT cover, but I make sure my clients fully understand the pros and cons of the cover, so you may have a valid point there!
Not many life companies offer whole of life contracts now. They still have a place though, for example insuring against an inheritance tax liability on a joint life second death basis and written in trust to the beneficiaries.
I can't remember the last time I actually had clients take one out though, despite occasionally recommending them for IHT cover, but I make sure my clients fully understand the pros and cons of the cover, so you may have a valid point there!
Maybe I should have cancelled the policy at the beginning of 2020. By the end of this year I would have saved 5 years premiums. I could have diverted the funds into my SIPP, or an ISA.
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If they had shown it to me day 1, I wouldnt have done it.
Who would?
One of the reasons your premiums are increasing now to maintain the cover (or you can keep the premiums the same and accept the drop in cover level) is that the investment performance hasn't been as good as needed to maintain the cover. Ironically you are quite happy with an article that quotes double digit returns per annum over the next 30 years in order to justify the exceptional figures projected. Can you see how this article could lead to many unhappy customers if they believe the figures quoted and things didn't quite work out as well?
With WOL you will usually get to a point where the fund value starts to decrease each year and/or the premiums increase massively to maintain cover, after all it is a policy that WILL pay out if you keep paying the premiums, unlike term assurances which have a specific end date and are therefore usually very unlikley to pay out. Usually there is a point where clients decide to cash the policy in and take the surrender value rather than keep paying ever increasing premiums.
I have a WOL life and critical illness policy, the cover has just reduced from about £220,000 to £100,000 (I elected NOT to increase the premiums to maintain the cover), the policy has pretty much done its job now though, taken out when I was in my 30's it has provided financial security for the last 28 years, I haven't died or suffered a critical illness so it hasn't paid out, but it's done its job. My financial situation is far more secure now than it was back then so I'm ok with the drop in cover.
I was looking to give my wife a little more financial security after I was dead.
My policy has probably made the premiums unaffordable at the time I am most likely to die.
I had done a SIPP through Standard Life, and some ISAs for me and my wife through Skandia.
Then something really strange happened.
He had stated during one of our meetings that he would love to spend the New Year in Scotland one year.
I said that I could arrange this FoC, and that he should perhaps check with his wife, and come back to me if he wanted me to book it.
He did, and asked me to book it.
I booked a four bedroomed lodge for his family over New Year.
He was a no show.
He didnt phone to cancel the booking, they just didnt show up.
He didnt phone me to apologise, or contact me in any way.
At least, not until he sent me a letter some 15 years later.
The company I worked for probably could have got a grand for a New year booking for a week in a 4 bedroomed unit.
I have not spoken to him to this day.
It seemed really weird, as I was paying a grand per month into the SIPP at the time, and he was earning a few quid off me.
We had discussed a life insurance policy, and I felt I was ready to take one out.
This was maybe 3 or 4 years later.
I phoned Standard Life, and they sent a guy out to see me.
I saw this guy once for maybe a couple of hours.
My wife was not involved in any way, other than maybe a signature.
She wasnt involved at all, but I guess she must have signed, as it turned out to be her policy.
He did the policy through Skandia.
My wife wasnt working and had no income at the time.
Yet it was her policy.
Skandia, became Old Mutual, and then ReAssure.
By the time I got the premium projections, I had moved both of our ISA account to Standard Life/Abrdn.
I had been allocated an office based financial adviser.
He gave me one phone call per year, to go through my account.
So when I received the projection, I complained to Standard Life/Abrdn.
They were happy to deal with me over the complaint.
However when I contacted ReAssure over the projection, they refused to speak to me as it was my wifes account.
Standard Life did not uphold my complaint.
I am not sure whether I took it to the Ombudsman.
It was a little difficult at this stage as I had an ongoing relationship with Standard Life.
My SIPP had grown, and we had 2 substantial ISA accounts with them, in additional to the life insurance policy that I had done through them.
When I received the projection, I felt that it was a ridiculous policy.
This was 10 years after I had taken the policy out.
If you plotted a graph using the projection.
There would be a point where the premiums would become unaffordable.
There would also be a point where my contributions would exceed the payout.
Had I seen a projection prior to taking the policy out, I definitely wouldnt have.
I was completely unaware that the monthly payments would increase, or the extent of the increases.
I was also unaware that the cover would be reduced, or the extent of the reductions.
I will be forced to cancel the policy at some point.
The question is when rather than if.
We've all hung " Aunty's Bloomers " on the washing line for everyone to see. cough!
When Standard Life declined your complaint they will have given you the option to then take it to the Ombudsman. This would have cost Standard Life a fee (currently £650), even if the Ombudsman found in their favour.
He seemed like a nice bloke.
He could have phoned the company to cancel, and everything would have been fine.
He could have phoned me to apologise, and everything would have been fine.
I realise that sometimes the unforseen happens, and cant be helped.
As far as the policy is concerned, I was completely in the dark.
I just cant see any sense in taking out a policy like this.
I am able to afford the payments now, as I have only increased them once.
There will definitely come a point where the premiums are unaffordable, and I will have to cancel the policy.
Prior to reaching that point, I will reach a stage that the cover will have been reduced so much that it will be less than I have paid in.
I dont intend to increase the premiums any further.
So as time goes by, I will have contributed more, and the cover is further reduced.
Why would anyone possibly buy a similar policy.
It was only of any value if I had died within ten years of taking it out.
It looks like your policy was set up at or near 'maximum cover'. This means that the life cover and premium level were only guaranteed for 10 years, at which point the plan would be reviewed with the premiums having to increase or the cover would decrease, at maximum cover level these changes can be quite large, as you have seen. These reviews then happen every 5 years or even yearly over certain ages.
A WOL policy on 'standard cover' would have much smaller changes at the reviews or even no change at all but simply because the initial premium level would be much higher for the same sum assured and this would lead to a bigger pot of money being built up within the plan. It is the likelihood of this pot of money being able to support the life cover deductions that dictates the premium levels going forward.
They are excellent ways of providing life cover when the term of the need isn't known. As an alternative for example, if you need to cover a repayment mortgage debt, then you use a mortgage decreasing term assurance. This plan covers the amount outstanding on a mortgage and ends when the mortgage ends. Generally the premiums don't change during the term of the policy. But you get nothing back when the policy ends and there is generally no option to extend the cover. They are generally much cheaper than whole of life policies, certainly those set up on a standard cover level.
IF your wife's financial situation is secure in the event of your death then it could be argued that she no longer needs the cover, however I don't know your situation so certainly couldn't advise that you cancel the plan. There's always the obvious risk with giving that advice!
One thing I can agree on is that all insurance is a waste of money IF YOU DON'T HAVE TO CLAIM. Car insurance for example, a complete waste of money if you never make a claim and many people wouldn't take it out if it wasn't a legal requirement to do so.
On the other side of the coin is those that make a claim, insurance policies are then excellent value. My other half, for example, took out a critical illness policy nearly 30 years ago. She was in her early 30's, non smoker, non drinker, fit, sporty, not overweight, in fact a very, very low risk. She got cancer, within two years of taking the plan out. From memory she paid less than £500 in total premiums into that plan over the two years before the claim. It paid out £170,000. Not all insurance is bad value!
The surrender value last year was £875.33.
This year it is £512.64.
This is after paying £174.84 per month.
It was originally £150.
The cover has been reduced from £150k to £90k.
I was involved in sales for most of my working life.
I would challenge the best sales people that I have ever known to sell just one of these policies in their whole lives, if they fully informed the prospective customer.
I can't remember the last time I actually had clients take one out though, despite occasionally recommending them for IHT cover, but I make sure my clients fully understand the pros and cons of the cover, so you may have a valid point there!
By the end of this year I would have saved 5 years premiums.
I could have diverted the funds into my SIPP, or an ISA.
https://www.msn.com/en-gb/money/other/savers-max-out-pension-pots-as-tax-raid-looms/ar-AA1rcahn?ocid=msedgntp&pc=NMTS&cvid=188c15113fb142fc8fbba896305c9f46&ei=43#fullscreen