Life insurance / index linking - old policy with high premium and low pay out

worded

Index linking and premium

My Mother got a policy approx 20 years ago
It was index linked

In her 80s now the premium is now 250 Pm and the pay out less than 30 K

I’m considering contacting the financial ombudsman to have a look over the policy

It seems to be a very high premium for a very small payout

Does each company index link premiums and payouts them selves or are they guided somehow by state rules

It seems to me that the premium went through the roof for very little gain,
Doesn’t seem to be fair

worded

Edit > insurer is New Ireland


Has no one got a comment on this ?

Is this normal ?

Sounds like a gouging

My understanding was that to index link is to protect against inflation

Bit what’s to stop a financial institution from upping the premium drastically while keeping the payout very low?

Does each insurance co decide on what’s fair?
Is there any case to answer if they are taking the client for a ride ?

joeysoap

If its Irish Life I’m not surprised. I took out a policy with them when the kids were young and I had a mortgage, which had a review every 5 years. With index linking. At about 55 I was informed that the premium no longer covered the payout and I had two choices either up the premium or decrease the payout (which wasn’t that big). I went to an independent broker who said the premium was set to cover the average number of payouts for persons of that age. Or something like that. I cancelled and took out a 20 year policy on both lives, no reviews, index linked. He did warn me though I wouldn’t like the premium they would look for in 20 years.

I can remember thinking ‘if I’m still alive in 20 years’. Still a few to go, though tbh I’m sorry I didn’t pursue 25 years. You never know

Henry Ford III

worded wrote: »

Has no one got a comment on this ?

Is this normal ?

Sounds like a gouging

My understanding was that to index link is to protect against inflation

Bit what’s to stop a financial institution from upping the premium drastically while keeping the payout very low?

Does each insurance co decide on what’s fair?
Is there any case to answer if they are taking the client for a ride ?

It's a unit linked whole life policy with reviews.10 yearly, then 5 yearly, and finally annually over age 75 I think.

The policy includes and investment element. The idea is that this rises over time and eventually equals the sum assured.

In reality though the initial premiums were set too low, and the investment fund isn't big enough to support the cover.

I'd be inclined to take the small encashment value now.

Drumpot

Sounds like reviewable whole of life. Irish life have been trying to get people off these because they are quite often a disaster for most clients the longer they live.

People pay into them for so long they are loath to make a decision that’s usually either to cancel or accept a much lower amount of life cover at a fixed cost that’s usually as much as they are paying. They can’t get their head around the fact that as they get older the cover is going to jump up. Because it’s usually incremental increases it’s hard for people to make a call.

You could say that you are considering a complaint to the ombudsman but would like a quote to age 90 and for the rest of your mums life (whole of life quote). They might not be able to provide one which basically means you are gambling that the cover either won’t go up too much (it’s at life companies discretion) or the person covered will die before it makes any meaningful difference in cost.

Also ask the life company if they are offering any alternatives or any cash back option (unlikely unless there is a value but if they think you are going to complain they may offer something).. Irish life have been offering clients to move to fixed premium/cover with 10% discount. See what that price is like.

Also at this stage, what is the cover for? If it’s buriel money then ask do you still need the cover? Are you better to just save the €250 per month? There is always a trade off when cancelling or changing life cover. You can complain to the ombudsman but you should first complain to Life company and give them a chance to respond, that’s usually the first port of call. If you are unhappy then take it to the ombudsman.

skippy2

Nobody at 80 years of age really needs life insurance.
It is really to provide for your dependents if you have any during your life
Such as when you are married have children etc that rely on you
Once your children are grown and self sufficient if you die they should not be affected monetary wise
At 80 you should have no one dependent on you for a living.
Hence no real need for life insurance.
Nice profit earner for companies though

worded

The insurer is It’s New Ireland

worded

skippy2 wrote: »

Nobody at 80 years of age really needs life insurance.
It is really to provide for your dependents if you have any during your life
Such as when you are married have children etc that rely on you
Once your children are grown and self sufficient if you die they should not be affected monetary wise
At 80 you should have no one dependent on you for a living.
Hence no real need for life insurance.
Nice profit earner for companies though

The policy gives my dad a few € if my Ma passes.
He couldn’t get a policy due to a heart condition

So the dependent is the other person.

I’m going to phone them very soon and ask has it a surrender value. Next approx premium rise of any ... etc

Henry Ford III

The issue really is the type of product sold and how it was sold.

There have been fixed premium whole life policies around for a while.

I'd be chasing whoever sold your Mum this.

Policy Review

pretty solid advise shared on this by others so far, however you'll get little to nowhere with the ombudsman. Several similar cases with possibly the same products have been brought forward by policy holders over the years and nothing has been done about it.

You could ask for a cost of benefits breakdown, it wont be accurate but will give you an idea on policy review increases. More than likely you'll see the policy is not worth the paper its printed on and cash in/cancel