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Client’s dilemma on reviewable contract

Ten years ago, we arranged for one of our clients a 10-yearly reviewable whole of life insurance with Sun Life, as it was then. The sum assured was £100,000 and the premium was £16.33 a month. The client has a disabled son, so the cover is likely to be required indefinitely.

The option of balanced cover was discussed but deemed too expensive and the client was fully aware that the lower-cost option would result in a substantial hike to the premium at the policy’s 10th anniversary if he wanted to maintain the same level of cover for a further 10 years.

It was our understanding that the cost of cover for a further 10 years from the policy’s 10th anniversary would be based on the premium rates applicable to his then age. So far so good.

Axa Sun Life has recently issued the results of its 10th anniversary review and announced that to maintain the same level of cover on the same basis for the next 10 years, it will now require a premium of £50 a month – an increase of more than three times the present premium and, it turns out, 37 per cent more than what it is quoting currently for a brand new policy, subject to underwriting. To my mind, this is a rip-off.

The best current cost of a new whole of life policy with a different insurer on the same basis (cover of £100,000 on a 10-yearly reviewable basis) is just £25 a month – exactly half what Axa Sun Life is now demanding to extend the cover under our client’s present policy with it for a further 10 years.

The trouble is that the client now has health issues, so the option to extend his existing cover for a further 10 years without having to submit to underwriting is highly valuable. Unfortunately, with Axa Sun Life, it is also going to be almost unaffordable.

I appreciate that life companies cannot be dictated to as far as setting their premium rates are concerned but, if this particular case is not a glaring example of acting in the utmost bad faith and manifestly not treating customers fairly, then I would be interested to read of a worse example.

Julian Stevens
Harvest IFM,


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