Zombie Insurance Policies

Zombie Insurance Policies

At last, the financial services regulator, the Financial Conduct Authority is to conduct a review of all insurance policies, endowments and pensions that were sold between the 1970’s and 2000.

The review is to force providers to look at contracts that have unfair terms attaching to them.

This could be

• High cancellation penalties
• Policies that lock you in and that you cannot withdraw from
• Policies that do not allow you to change them

These types of policies are known as “zombie” policies.

Comments

On many occasions, when advising clients that have come to us with existing policies set up many years ago, we have found that little can be done to improve a client’s position because the cancellation terms are poor meaning that they can then be locked into higher ongoing charges with a view to never actually getting real value for money if they remain and no real value for money if they cancel because the penalties are so high.

In the spirit of being clear, fair and not misleading to investors, we see this as a good move to tidy up the financial services industry and ensure that clients get a better deal.