Life Cover - Sun Life Direct

Too good to be true? It almost certainly is. With critical illness insurance at least you will probably (hopefully) be still alive when a claim is filed. In the case of a Guaranteed Over 50 Plan the concept is that in order for your estate/executors to lodge a valid claim, YOU MUST firstly die. This approach has the benefit (to the assurer) that a contest over any claim refusal is highly unlikely. The most obvious rebuttal is that the complainant is not the policy holder, this individual being dead. The 'Plan' guarantees acceptance as soon as application is made. And the premiums start rolling in. For the initial two years, the most that is payable is 1½ times the premiums paid unless death is the result of accident on an authorised carrier. It could then be up to 3 times, but in any event a post mortem report will be required to prove that the cause of death was due to the accident and not some other health reason. Of course, to be accepted into the Plan details of any known conditions were not necessary, but at the time of death the circumstances almost certainly will be very different. After all, (unproven) good health at 50 years of age doesn't imply good health at 80. If the individual had high blood pressure for example, then the refusal could involve a 'justification' of death not as the result of a crash, but possible related heart failure caused by the stress of a crash. The most important fact to appreciate is that if any monthly payment is not received, then after the '30 days' grace' period, the entire premium payment total from day one to date will be forfeit. You will note that it is not make clear what the fixed sum will be if less than the maximum monthly payment is made. Only that the maximum of £20,000 will ever be paid. The conditions do state that premiums paid can exceed the maximum return possible. An upper limit of £74/month for 35 years (age 50 to 85) would reach more that £31,000. Only £20,000 is payable. When you are 50 years of age, the age at death cannot be known, so the more you pay in the greater the return if death were to occur before term. However, the actual payment cannot realistically be predicted and you may survive to age 85, or beyond. It's not indicated whether you would lose everything or simply have your premiums returned without interest and with no allowance for interest. Any interest is made by Sun-Life Direct by investing your premiums. You get nothing and you cannot invest the money you pay Sun-Life Direct. The problems will begin when death occurs early on into the Plan and before a significant premium total has been paid such as if death were to be at 52 years of age and the Plan was started at the minimum 50 years old (after the required two full years of guaranteed acceptance). The death certificate is required and will constitute the document to justify any refusal of payment. This combined with the medical history that was not needed to be accepted into the Plan will become a very powerful weapon in the assurer's armoury. If you survive one day after the 85th birthday what happens? Is the total of premiums paid returned? Inflation will ensure the value is less, but the assurer will have invested your premiums since day one and made a profit from that in any case. The guaranteed acceptance makes it clear that there will be conditions applied after death that will be very difficult (if not impossible) to contest. The details of any illness will be questioned as access to the medical history will be made available from your doctor to the assurer. This could provide a range of dubious refusal justifications. The faces of those you might trust (June Whitfield or Michael Parkinson) can be viewed as a cynical ploy by the assurer to gain leverage to peddle the Plan. Caveat emptor By NOT wearing rose-tinted glasses, FAQs (Frequently Asked Questions) could appear as described below.

1. Am I eligible for the Guaranteed Over 50 Plan?

Of course. If you weren't, Sun Life Direct could not recover premiums from you. You must be between 50-85 years of age and probably you have an illness now (that you are unaware of) or you more than likely will before the maximum limit. Anyway, your guaranteed acceptance into the Plan does not define what conditions apply after you have entered.

2. When will the Plan pay out?

• If you die during the first two years (and as long as all the premiums have been paid without default) we will pay out an amount equal to 1½ times the premiums paid, unless you die as the result of a travel accident [as defined in Section 3]. This can be up to 3 times the premiums paid, but only if the cause of your death meets the absolute minimum criterea. In principle. Proof will be required.
• After you have had the Plan for two years, we will pay out a 'fixed cash sum' on your death.
• If you die as the result of a travel accident. Or as the policyholder within 90 days from injuries sustained in it, in which case proof will be necessary that death was as a result of the injuries sustained. The longer you survive up to the full 90 days, it becomes easier to dissociate death as a result of the accident and not some other reason, which will possibly be 'found' in the medical history that becomes available in the event of a claim.

3. What are the features and benefits of the Plan?

• Your acceptance is guaranteed
• After two years a fixed cash sum (undefined) is, in principle, paid out on your death
• From day one of your Plan, we will pay out three times the fixed cash sum if you die while the policy is in force, solely as a result of (and within 90 days of) accidental bodily injury you suffer while travelling legally as a duly licensed driver or passenger, in or on a motor vehicle. You should note that this does not describe air travel, but see bellow.

OR While travelling legally as a fare-paying passenger (including getting on or off):

• by rail
• by road
• by air in passenger carrying aircraft operated by airlines or established charter companies and flying to and from licensed airfields
• by sea

4. What are the exclusions and limitations of the Plan?

• The full fixed cash sum is not payable on death during the first two years
• If you were to die during the first two years except as the result of a travel accident as defined in Section 3, we will pay out an amount equal to 1½ times the premiums paid.
• The maximum combined initial life cover you can receive from the Guaranteed Over 50 Plan or similar AXA Sun Life Over 50 Products, is £20,000 in total, excluding travel accident death benefit. You can pay up to £31,000, but once the Plan has started, you must continue to pay all the required monthly premiums and without cancelling the Plan and starting over from nothing you cannot change to a lower premium. But we do not state this so you must determine for yourself what might happen in your circumstances.

• Unfortunately, you will be placed between a rock and a hard place: once started, the premiums cannot be reduced. You could begin a new Plan, but all the premiums would be forfeit. You could easily overpay the maximum £20,000 (£74/month over 35 years = £31,080). Whatever premium you choose to pay, not knowing your future, you cannot predict your future circumstances. Maybe. It's a real toughie is that one.

• The maximum total of your monthly premiums for AXA Sun Life Over 50 Plan(s) or similar is limited to the lower of £74 a month or the premium that will achieve the £20,000 life cover. You could, theoretically, pay 100% more than you could ever get back
• Inflation will, over time, reduce the value of the cash sum paid out on your death. That benefits us and not you, of course.

• The Plan has no cash-in value at any time - ouch! If you live to after your 85th birthday then all is lost.
• Depending on actually how long you live, the total premiums paid may be greater than the cash sum payable on death
• If you die as a result of a travel accident as defined in Section 3, the additional cash sum will not be paid out if death is as a direct or indirect result of:
  • you engaging in or practicing for motor vehicle racing, trials or timed events
  • war or hostilities
  • intentional self injury or suicide or any attempted suicide
  So, if you are over 50 and have signed up for the Plan, do not engage in bungee jumping, parchute jumping, SCUBA diving or any activity that could remotely be considered 'dangerous'. Being a passenger in a car that is involved in a crash that involves your death would be tricky situation for your executors to sort out.

5. How much will it cost?

A regular, fixed premium will be payable 'for life' (but only up to 85 years of age in any case), based on your age, gender and the undefinable 'fixed cash' sum the Plan will pay out on death. The more you pay, the more, in principle, you could get. Up to the maximum 0f £20,000, of course. The premium and benefits you have selected will be shown on your Policy Schedule. Men do not generally survive as long as women and if you are a smoker then all the associated cardiovascular problems become available to us. At the beginning of the Plan we are not interested (to guarantee your acceptance), but lifestyle will, of course, become important during the possible 35 years of a Plan.

6. How do I pay?

Monthly by Direct Debit.

After the first premium has been paid, if any subsequent premiums are not paid on the due date, we will allow thirty days of grace during which time you can pay the outstanding premium and the policy will remain in force.

If the outstanding premium is not received within the days of grace, the Plan will be cancelled and you will not get anything back. You lose everything that you've paid.

Quite frankly, you'd be better off

putting your money

somewhere else, like a savings account

7. How do I cancel the Plan?

You can change your mind within 30 days from when you receive the "Your right to change your mind" form. Complete and return the form within 30 days to: The Manager, New Business Customer Services Department, AXA Sun Life plc, PO Box 1810, Bristol BS99 5SN and AXA Sun Life will refund any premiums you have paid (the first one unless you are proactive and have sent the second before changing your mind). After this, you may cancel your Plan at any time by notifying AXA Sun Life in writing. If you do cancel, your life cover will stop and you won't get anything back. You lose the lot.

8. What about tax?

The amount paid on your death will normally form part of your estate, so may be subject to inheritance tax, unless you write your Plan subject to an appropriate trust.

Tax information is based on AXA Sun Life’s understanding of current law and HM Revenue & Customs practice. How taxation could affect you will depend upon your individual circumstances. Tax legislation may change in the future.

9. How to make a claim

In the event of death, a claim can be made in writing to AXA Sun Life plc, PO Box 1810, Bristol BS99 5SN or by telephone on 08457 322 223. We will need:

• The Policy Schedule and Endorsements (?) to be returned
• The name of the person making the claim and evidence of their entitlement to the policy proceeds: legal executor.
• The name and date of birth of the policyholder (just to confirm between 50 and 85. Just one day older and...
• The original death certificate. Make sure that enough originals are ordered when registering the death.
• A copy of the policyholder's Will if there is one. We don't provide a valid reason for asking for the Will, but we don't need one.

It is important that you keep the policy documents safe and let your next of kin know where to find them. Since the Direct Debit will still be active (otherwise the Plan is cancelled if still within the 35 year span), this must be cancelled. Be careful you let us know before you do this or you may inadvertently compromise your claim.

From the date of death to when the payment is made we will add interest to the cash sum paid out. The rate of interest used to calculate this amount will typically be around 0.5% per annum lower than the Bank of England Base Rate.