SJP strikes again
Discussion
An elderly lady gets charged nearly £20k a year for life insurance:
https://www.telegraph.co.uk/money/katie-investigat...
"My mother recently received a letter from SJP saying that she can maintain the £247,000 payout on death by contributing £19,235 a year for another five years until 2024. After this she can keep paying this amount but the payout will halve to £123,500 when she dies. Or, she can maintain the £247,000 payout by upping payments to £43,941 a year."
What a lovely company to deal with. Only gets sorted when a journalist gets involved. I wonder if she has investments with them as well?
https://www.telegraph.co.uk/money/katie-investigat...
"My mother recently received a letter from SJP saying that she can maintain the £247,000 payout on death by contributing £19,235 a year for another five years until 2024. After this she can keep paying this amount but the payout will halve to £123,500 when she dies. Or, she can maintain the £247,000 payout by upping payments to £43,941 a year."
What a lovely company to deal with. Only gets sorted when a journalist gets involved. I wonder if she has investments with them as well?
Surely with Life Assurance like this one (as opposed to Life Insurance) all that really matters is whether the life assurance payout exceeds the total premiums paid ? So when would the breakeven point on this one be after the premium increase ?
This is reviewable Whole of Life. Premium increases are both inevitable and actuarially calculated. It's mathematics of life expectancy. In cases like this one where plans will pay out on death whenever that happens (and there is no cross subsidy from premiums of survivors like with regular term insurance) how are the insurer supposed to cover the payouts unless they have collected at least that amount in premiums?
A Whole of Life plan is essentially a long term savings plan where you eventually get back your premiums.
I suspect various people (including the Telegraph) may be catastrophically missing the point.....
Edit: I haven't actually seen the article other than the bit you can see without subscribing but an assuming it is critical of St James Place hence the OPs thread title.
This is reviewable Whole of Life. Premium increases are both inevitable and actuarially calculated. It's mathematics of life expectancy. In cases like this one where plans will pay out on death whenever that happens (and there is no cross subsidy from premiums of survivors like with regular term insurance) how are the insurer supposed to cover the payouts unless they have collected at least that amount in premiums?
A Whole of Life plan is essentially a long term savings plan where you eventually get back your premiums.
I suspect various people (including the Telegraph) may be catastrophically missing the point.....
Edit: I haven't actually seen the article other than the bit you can see without subscribing but an assuming it is critical of St James Place hence the OPs thread title.
Edited by OddCat on Saturday 19th October 15:42
OddCat said:
A Whole of Life plan is essentially a long term savings plan where you eventually get back your premiums.
If you'd read the article you'd have seen that so far she has paid in £144,000 & if they stop paying in SJP would only give back £49,000. If they pay in another £96,175 over the next five years the total paid in would be £240,175 for a payout of £123,500.Best of all she could maintain the full £247,00 payout at a cost of £43,941 a year for year 6 onwards! In year 6 she would have paid in £284,116 for a £247,000 payout. In year 7 she would have paid in £328,057 for the same £247,00 payout.
Still think that's a good deal?
....it depends when she is thinking of dying. If she's going to die next year its a great deal...
The £49,000 will be the surrender value (the premiums paid to date less the amount used to pay for cover). So she has paid £95,000 for 27 years worth of cover. She can cancel now and pay no more. Only if she lives more than 6 more years does it become a losing situation where premiums exceed payout. That's how these things work. It's really quite simple and not unique to St James's Place.
The £49,000 will be the surrender value (the premiums paid to date less the amount used to pay for cover). So she has paid £95,000 for 27 years worth of cover. She can cancel now and pay no more. Only if she lives more than 6 more years does it become a losing situation where premiums exceed payout. That's how these things work. It's really quite simple and not unique to St James's Place.
Edited by OddCat on Saturday 19th October 16:08
JulianPH said:
You just have to love the financial services industry!
I can't think of anything about it that that wouldn't fill me with total distrust and contempt!
Does this meant you don't appreciate how a whole life policy works and why you can't just discount the 27 years of life insurance cover that has been provided to date when assessing the value of the policy?I can't think of anything about it that that wouldn't fill me with total distrust and contempt!
It's bit like those people who think they should get a refund of their car insurance premiums because they didn't have an accident...
Edited by Gnome_parody on Saturday 19th October 19:50
SJP are financial advisers right?
Why would they recommend that a person who has the income (bearing in mind their age etc) to afford £20k annually as a premium have £250k worth of life cover? What's the need for the cover when they must have significant assets to leave to their nearest/dearest.
Why would they recommend that a person who has the income (bearing in mind their age etc) to afford £20k annually as a premium have £250k worth of life cover? What's the need for the cover when they must have significant assets to leave to their nearest/dearest.
Gnome_parody said:
Groat said:
Sidicks alert! Sidicks alert! Sidicks alert!
Groat adding his usual value to Finance threads, i.e. absolute zero, because he doesn't understand the first thing about Finance!
lol! of course you're Not_an_IFA are you???????
Edited by Groat on Saturday 19th October 21:31
mfmman said:
SJP are financial advisers right?
Why would they recommend that a person who has the income (bearing in mind their age etc) to afford £20k annually as a premium have £250k worth of life cover? What's the need for the cover when they must have significant assets to leave to their nearest/dearest.
Yes, that's the issue here, not what some people are suggesting.Why would they recommend that a person who has the income (bearing in mind their age etc) to afford £20k annually as a premium have £250k worth of life cover? What's the need for the cover when they must have significant assets to leave to their nearest/dearest.
Groat said:
......but will he make it back into NP&E before the mods catch up with him????
Will you ever add any value to a Finance thread or will you report any other members as returning banned members, or only those that have highlighted your ignorance and lies previously?I think we know the answer to that!
Gnome_parody said:
Groat said:
......but will he make it back into NP&E before the mods catch up with him????
Will you ever add any value to a Finance thread or will you report any other members as returning banned members, or only those that have highlighted your ignorance and lies previously?I think we know the answer to that!
Gnome_parody said:
mfmman said:
SJP are financial advisers right?
Why would they recommend that a person who has the income (bearing in mind their age etc) to afford £20k annually as a premium have £250k worth of life cover? What's the need for the cover when they must have significant assets to leave to their nearest/dearest.
Yes, that's the issue here, not what some people are suggesting.Why would they recommend that a person who has the income (bearing in mind their age etc) to afford £20k annually as a premium have £250k worth of life cover? What's the need for the cover when they must have significant assets to leave to their nearest/dearest.
1. How 'Whole of Life' works and why (potentially) is the lady complaining without good reason.
2. That the lady has had the policy since 1992 - it is simply a regular review / adjustment of continuing premium test is happening now (and, yes, she's had 27 years of life cover for what she has paid do far)
3. Why she took it out originally (usually to cover a potential IHT issue - joint life second death) and whether she still needs cover (she isn't being advised to take out new cover- SJP are not advising her to do that ). If it was for IHT shes had 27 years to move assets around and outside her estate to mitigate any IHT liability for goodness sake !
Alternatively, she can simply cancel it and then she doesn't suffer the £20k revised annual premium. Sorted.
I'd still like to see the full text of the article. Maybe the Telegraph were smart and told her this was all entirely normal ?
EDIT what premium would you charge then for a 5 year plan for an 87 year old lady for £250k life cover ? I bet none of you would risk it for less than £20k per year....
Edited by OddCat on Saturday 19th October 20:54
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