IFA warning after term renewal deal withdrawn
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An adviser has warned IFAs to beware of offering renewable term policies after a client’s policy was sold and the renewable option withdrawn.
King & Co Financial Services arranged for a client to take out a renewable 10-year term policy with Zurich which was due to be renewed on August 1.
On contacting Zurich last month, King & Co was informed that the policy was part of a book of business that was sold to Windsor Life, which is owned by Swiss Re, in 2003 as part of a closed life book sale.
Windsor Life told the firm the renewal option is not available and offered replacement cover for a whole-of-life policy.
A Windsor Life spokeswoman says: “Where a maturing policy has the option to renew, Windsor Life will offer a product that most closely matches the original contract.
“Due to the nature of Windsor Life closed book business, the new policy offered does not always match the original on a like-forlike basis.”
Zurich UK Life head of UK operations Tim Culling says: “Swiss Re confirmed to Zurich and the FSA that it would honour all contractual policyholder benefits.”
King & Co paraplanner John Smyth says: “Advisers should know that the renewable option is not worth the paper it is written on in this situation and yet people are paying more to have a renewable option.”
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Readers' comments (9)
Sean | 29 Jul 2011 8:37 am
Surely this is breach of contract?
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Paul Howard | 29 Jul 2011 9:32 am
I agree with Sean.
Windsot Life are not hnouring the terms of the contract and I would have though, when they bought the book of busienss, the FSA will have required Terms and Conditions to be honoured.
The adviser should commence legal proceedings against Windsor Life (should a short discussion with them fail to resolve the issue)
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Duncan Carter | 29 Jul 2011 9:45 am
I'm sure that now it's in the public eye, the regulators will be on to it like a flash in the interests of TCF.
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Stan Kirk | 29 Jul 2011 9:45 am
This is a simple matter of law and the answer is to sue them. A joint action on behalf of all of those affected seems the best way forward.
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Julian Stevens | 29 Jul 2011 10:19 am
Having been in this business since 1978, I don't trust any of the life companies to honour anything, contractual or otherwise. Even Skandia, who are better than most, screwed us on the incremental commission terms for their PP5 contract. Is it any wonder that the industry is held in such low esteem by so many people, both within and without?
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Sam Caunt | 29 Jul 2011 10:32 am
What is the point of TCF? Did Zurich consider the implications for their clients and inform them? If we did something like this the first thing at the top of the agenda would be the impact on clients and how to mitigate it. TCF failure again although in 2003 I would accept that TCF did not exist.
I am no legal expert but I would suggest that it is illegal - relatively we have sold a lot of renewable plans for business protection
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Mr_Know_It_All | 29 Jul 2011 12:02 pm
@ Sam Caunt
TCF haas been here since the FSA came into effect!
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Anonymous | 29 Jul 2011 12:59 pm
Completely agree that the customers policy conditions should be honoured. I would highlight that it is Windsor Life who have been responsible for administering and meeting the contractual obligations of the policy, since they purchased the close book of business in 2003.
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Evan Owen | 11 Aug 2011 11:56 am
The small print often said that renewal was available via whatever policy the provider had available, like for like cover was not guaranteed. I wonder why life offices sell these things off in the first place.
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