Sunday Times 29/12/2013

Q. AK writes: We were sold a flexible protection policy in 1991. At the time, the insurance salesman assured me I would have to pay IR£25 a month for life to insure both my wife’s life and my own, and that the sum assured of IR£70,750 would be paid after the second death. We paid this premium for 15 years. Then, in 2006, we were informed the monthly premium would be increased to €37.07 and we continued paying at this level. Now I have received notice that the premiums must increase to €214.37 a month, and have been advised that at our age (we are in our seventies) reviews will become more frequent and the premiums probably more expensive, at a time we can ill afford it. In view of the salesman’s assurances, could it be construed that this policy was mis-sold to us?

A. To date similar complaints brought to the Financial Services Ombudsman have failed because the potential for reviews was clearly disclosed in the policy terms and conditions. However, you may find the consequences of a ‘review’ may not have been fully explained, but for a claim to succeed you must have sufficient evidence to support your side of the story. 

On the balance of probabilities, the only chance you have of having a complaint upheld is if you have product literature or something in writing from the salesperson which lead you to believe the sum assured and premium were guaranteed for life or if you can prove the insurer would have had a more appropriate product that suited your needs than the one sold. 

Could the insurer have offered you a guaranteed product and if so why wasn’t it recommended? Perhaps another type of life assurance may have been more suitable for you?  Another approach is to consider if the initial amount of cover on your policy was excessive for your requirements. If a more realistic amount of cover had been sold then the effects of the resultant premium increases you are going through at present wouldn’t be as bad.

Another issue you need to address is the provision of life cover at an affordable premium or to explore the possibility of providing for your requirements in some other cost effective way. 

The oldest age to switch into a policy tends to be around 75 next birthday and could be health dependant. If the issue is left as it is then in future years you may be forced to give up the policy before a claim is made resulting in no payout.

Back in 1991, if your requirement was life long cover at a guaranteed price then there was nothing stopping the sales person explaining that they had nothing suitable to offer.

Readers technical question answered by John Geraghty of LABrokers.ie