Life cover premium doubled at age of 89
For the past 20 years John Thacker has paid more in premiums than his whole of life insurance plan will pay out, writes Amelia Murray.
Over two decades Telegraph Money estimates he has spent £6,803 in premiums which will pay out on his death £5,000 for his funeral expenses.
When he took out the Scottish Widows Lifetime Security Plan in 1996, Mr Thacker, 89, was happy to pay £27.05 a month. In 20 years, the plan has been reviewed on several occasions and Mr Thacker’s premium has been increased each time to ensure the £5,000 cover remains.
However, at 89-years-old Mr Thacker was shocked when Scottish Widows wrote to him to tell him his £32.53 premium was to be doubled to maintain the sum assured. If he did not increase his payments, he was told his cover would plummet to £3,115.
The retired farmer, who has lived alone in Worcestershire since his wife died 15 years ago, says he can barely afford the current payments on his modest state pension, let alone £64.23 a month.
Scottish Widows said in a letter that the reviews formed an “integral part of the contract” and suggested Mr Thacker consider whether continuing with the plan was “in his best interests”.
If not, he could “surrender the residual value” – insurance jargon for cashing in the plan.
Mr Thacker said the letter was “such a shock” and left him feeling deeply distressed. He said: “I’ve got to pay double or the sum assured will be almost halved.
“It’s just senseless. It seems as if Scottish Widows can just do what it wants. What’s to stop them charging me £1,000 per month next year?”
After being contacted by Telegraph Money, Scottish Widows agreed to freeze Mr Thacker’s premium at the current £32.53 and make no further reviews. A spokesman said: “We appreciate that Mr Thacker has not had a satisfactory complaint experience over the past six weeks.
“Given this, and the elapsed time, we don’t want to cause him any more distress and inconvenience so, as a gesture of goodwill, we will freeze his premium at £32.53 per month and guarantee the £5,000 sum assured on death.
“We also commit to no further premium or sum assured reviews.”
Others in his position may end up cashing in plans or battling to continue with premiums – only for them to rise again following future reviews.