Where is my £35,000 cover?
In 1986, my dear late wife and I placed £4,000 with an assurance company for a “whole of life” policy for us both. After my wife died, I assumed that our daughter and son would share the £35,000 when I died.
I kept track of it as it moved around from provider to provider, eventually arriving with ReAssure.
The financial adviser, now retired, assured me everything was still OK, even though I noticed recently that the amount was apparently going down drastically.
I am now nearly 91. Can you help me over what has become a very worrying situation? NB, YORKSHIRE
In fact, the letter you received recently from ReAssure told you that the policy had exhausted itself in 2010. In the absence of further payments being made into it, the policy should have lapsed then, as it was going to now. ReAssure had written to you, saying: “To allow you time to consider your options and to make alternative arrangements, we will continue to provide cover for a further three months from the date of this letter, at which point the benefit will lapse and the policy will terminate.”
The policy had been set up to pay £35,000 on the second death. The £4,000 premium was to support this benefit at the time.
In the early stages, when people are younger, fewer units from the underlying capital need to be sold to pay for life cover.
Meanwhile, in theory, the money in the fund is supposed to increase, subject to fund performance, but that strikes me, with hindsight, as being a dream from cloud cuckoo land.
The policy should have been reviewed after 10 years and every five years following that.
This was fairly typical of these policies that were often rather pushed by some financial advisers in the Eighties, I suspect, with an eye more on the commission than the advantage to their clients. Also, in this era there were fears that life expectancy could be shorter, so this kind of life assurance seemed more attractive to customers.
What often comes as a shock to those with such policies is how more money is needed to support the underlying fund and, if it isn’t paid, how the cover diminishes as they get older.
In your case, due to an (as it turns out fortunate) administrative error, the reviews were never carried out. I approached ReAssure and, as information was not conveyed to you, ReAssure now accepts that you were not able to make informed decisions and could reasonably have expected that the £35,000 life cover would continue.
ReAssure said: “We are sorry for any concern this has caused Mr B.
“Although the one-off premium was not enough to provide for the continuing life cover, we appreciate the specific circumstances of the case, so have decided we will honour the original cover amount of £35,000 when a claim is made.”
I understand ReAssure will also send you a gift of a hamper, wine or flowers, to be chosen by you.