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Eagle Star endowment holders face 80% hike in premiums

Eagle Star has admitted some of its policyholders face premium hikes of up to 80 per cent to make up potential shortfalls in their endowment policies.

IFAs say they have been inundated with letters from Eagle Star informing them that clients are facing increases of up to 80 per cent.

The letters mean many clients are having to pay increased premiums just to ens-ure their policies repay their mortgages and IFAs are facing increased workloads advising clients on their best options.

Eagle Star says it cannot reveal the number of policyholders it has contacted about endowment shortfalls this year but says it did contact 88,000 of its 160,000 policyholders last year telling them they had shortfalls on their policies.

The company admits its low premiums for endowment policies mean it has left policyholders more vulnerable to endowment shortfalls than other life offices.

Zurich Financial Services senior external affairs consultant Jane Hewin says: “We used to offer very cheap premiums which were probably the most competitive rates at the time and the impact of this is that the potential area of shortfalls is greater.”

Troy French & Partners partner Peter French says: “The worst shortfalls are coming from Eagle Star. The original premium rates were set at a very low level, reflecting grossly over-optimistic rates of growth.

“No doubt, the low rates were a considerable assis-tance in enhancing sales at the time but now policyholders are suffering.”

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