# Joe Duffy Show on Whole of Life/Investment policies



## Duke of Marmalade (18 Jan 2016)

Joe was in fine form today.  Possibly the fruitiest was his shock at hearing from the person whose term assurance ended at age 65.  A scandalised Joe observed that after 65 was when you really needed life assurance.  He opined that life assurance at younger ages (when you had little chance of collecting) was nothing short of "gambling against yourself".  When Joe asked how much they got back when the policy terminated and was told zilch he became apoplectic.  He questioned how could (such gougers) need a taxpayer bail-out.

Just for clarification to those who might have accepted some of this, a term assurance to age 65 in the majority of situations would be an exemplar of good advice.  And of course Irish Life did *not* receive a taxpayer bail-out.

This was by a long way the worst performance I have heard from Joe.  His total ignorance combined with his gratuitous accusatory language seems to me should be legally actionable.


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## Monbretia (18 Jan 2016)

I know, it was painful to listen to.   I never understand how people view life insurance so differently from house or car insurance, I have paid a fortune in both over the years as has everyone and do we get anything back, of course not!   You don't take out house insurance and hope to claim, same with car but even more so with life insurance isn't it the best scenario if you never have to claim.

That said the whole of life policies are a bit of a cod, do any of them every remain affordable to the end?


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## Duke of Marmalade (18 Jan 2016)

Monbretia said:


> I know, it was painful to listen to.   I never understand how people view life insurance so differently from house or car insurance, I have paid a fortune in both over the years as has everyone and do we get anything back, of course not!   You don't take out house insurance and hope to claim, same with car but even more so with life insurance isn't it the best scenario if you never have to claim.
> 
> That said the whole of life policies are a bit of a cod, do any of them every remain affordable to the end?


Agree absolutely.  Those WoL policies were something of a folly for which I'm afraid the actuarial community need to do some answering.  Joe started off ok, if slightly OTT, in highlighting the case of a policy review almost quintupling the premium.  I also think the lady who had her sum assured and premiums index linked was badly treated by a policy review.  Whatever about level WoL policies index linked policies never had a hope of being sustainable.

But it was the outrageous way in which Joe was scandalised by such things as people getting less than their premiums back from their life assurance and young people "gambling against themselves" and Irish Life being bailed out by the taxpayer which demonstrated at best a complete and wilful ignorance on his part.  The broker guy had a slight point about mixing savings and protection but let himself down by playing along with Joe's populist rant eg against the "gobbledy-gook" T&C.


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## Brendan Burgess (18 Jan 2016)

Duke

Why don't you ring in tomorrow and tell him that you have been paying your car insurance for 10 years with AXA and have never made a claim and now you are 65, they won't give you any of your money back? 

Brendan


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## Duke of Marmalade (18 Jan 2016)

_Boss_ I know people who worked in the industry and there was one key rubric, you do not talk to Joe.


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## postman pat (19 Jan 2016)

Yes,I must agree that Joe was off the wall today,maybe he was playing to the gallery.


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## RMCF (19 Jan 2016)

Its not the first subject that Joe would have pontificated on which he doesn't fully understand.

I hate listening to Joe when he loads his show with callers to suit his agenda and argument. As soon as anyone would come on to argue against it and point out the error of their logic, they are usually let go asap.

It really is time that people in this country started to take some responsibility for their actions when it comes to money and financial matters. Stop signing for things if you don't understand the consequences.


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## IsleOfMan (19 Jan 2016)

Joe Duffy was appalling. He hadn't a clue what he was talking about, this is par for the course though. He is unable to follow any flow of conversation and constantly repeats over and over his opening line when he encounters someone who knows what they are talking about. He never asks an intelligent question.
He never advised the callers that they were insured for a sum of money from the day they took out their policy. Although you would think that these people would know this themselves!
It is well known that he reads the comments on Boards when his show is live and learns from it as he goes. Unfortunately for him Boards is off the air at the moment so he is left to flounder on his own.


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## Bronte (19 Jan 2016)

postman pat said:


> Yes,I must agree that Joe was off the wall today,maybe he was playing to the gallery.



He loves spinning. He's a total master at it.  That's what makes him so good at his job.  One may not like him but his show does get an audience and he does though tackle some institutions that deserve to be tackled.


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## postman pat (19 Jan 2016)

IsleOfMan said:


> Joe Duffy was appalling. He hadn't a clue what he was talking about, this is par for the course though. He is unable to follow any flow of conversation and constantly repeats over and over his opening line when he encounters someone who knows what they are talking about. He never asks an intelligent question.
> He never advised the callers that they were insured for a sum of money from the day they took out their policy. Although you would think that these people would know this themselves!
> It is well known that he reads the comments on Boards when his show is live and learns from it as he goes. Unfortunately for him Boards is off the air at the moment so he is left to flounder on his own.


Maybe he should try Askaboutmoney!!


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## ClubMan (19 Jan 2016)

I'm not talking about the life loan issue here.
The life insurance/assurance policy thing on Liveline also related to combined insurance/assurance and savings/investment policies that were sold.
Many (especially working class) couples bought these in the 70s/80s and paid in for years.
My own parents included. I'm sure that many of us remember the "insurance man" calling to collect premiums every week/month?
In some (many?) they were led to believe that they stood to receive a lump sum at maturity.
In many (most?) cases this lump sum was negligible or never materialised.
I have a strong suspicion that there was a significant element of hard sell and maybe mis-selling here - especially to people ill versed in the intricacies of financial products in an era of much less customer protection/awareness than now. But it's probably difficult to ascertain that for certain at this remove?
Yes, WE all know that insurance/assurance premiums are "gone" once spent but these products (deliberately?) obfuscated matters.
Notwithstanding the shock horror coverage typical of Liveline I think it's unfair to dismiss all of the people complaining about this issue/these products as hard necked chancers as some people seem to be doing here.


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## ClubMan (19 Jan 2016)

Brendan Burgess said:


> Duke
> 
> Why don't you ring in tomorrow and tell him that you have been paying your car insurance for 10 years with AXA and have never made a claim and now you are 65, they won't give you any of your money back?
> 
> Brendan


Somebody did exactly that yesterday - pointed out that we all pay home, car, health insurance and get nothing "back" if we don't get to make a claim.
He wasn't complaining - he was just stating this as fact and as something reasonable (i.e. you pay for the service).
He did also sympathise with some of the other callers who felt that they had been hard done by on the "savings/investment" part of their life insurance/assurance policy.
To be honest the whole programme was all over the place in terms of not clarifying what people were talking about but my point above stands that these combined life insurance/assurance and savings/investments policies were at best confusing and at worst a bit of a swizz and possibly mis-sold.
For example a few people mentioned the projections of maturity values originally presented to them. Again WE all know that these are simply projections but at least some of the people assumed that these were guaranteed amounts - and I suspect that the seller didn't try to disabuse them of this misconception...


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## terrysgirl33 (19 Jan 2016)

Endowment mortgage.


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## RMCF (19 Jan 2016)

Just listening to the show again, and its so clear that the majority of the public do not understand different financial products.
Callers are coming on and making incorrect statements and not being challenged on them. Many do not seem to understand the simple concept of what an insurance policy is for example.

Maybe it should be something we should teach young people at school now.


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## Bronte (19 Jan 2016)

Thanks Terry I fixed it.


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## trojan (19 Jan 2016)

Bronte said:


> Thanks Terry I fixed it.


It may not be a good idea to cancel a term policy once the mortgage is paid off. Again confusion here as some people dont realise that the term policy is aseperate issue and is a requirement by law for a mortgage in most circumstances. Why does joe duffy not get an informed person to simply explain issues like this when they are raised. I thought it was ironic when he took the final ad break in this section there was a long ad for Irish Life.


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## Monbretia (19 Jan 2016)

They should totally be taught at school, together with tax, budgeting and basic cooking but none of it appears to happen.

The late Colm Rapple always said don't mix life assurance and savings in the one product, he was right.


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## SoylentGreen (19 Jan 2016)

trojan said:


> Why does joe duffy not get an informed person to simply explain issues like this when they are raised.


 Another dreadful show. It was like one idiot talking to another idiot. Joe Duffy called in John Lowe to help out.
He allowed a woman to come on the show who said that a €20k life loan was now €180k after 10 years at 6.5% compound.


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## Duke of Marmalade (19 Jan 2016)

The saga continued today.  This time we get an example of a Life Loan of €20K which rolled up to €185K in 10 years.  That's 25% per annum.  Now that *is* exorbitant or just maybe we are not getting all the facts.

Endowment Mortgages were ill conceived, ask Eddie.  Ironically, though, in general Endowment Mortgages have "outperformed" Annuity Mortgages as the former fully enjoyed the fall in interest rates whereas the latter by definition became less and less exposed to the fall in interest rate.  The sting is that most EM buyers did not enjoy the much promised "surplus" or even had to make up a shortfall.

The Whole of Life phenomenon can be thought of as in the general class of "funding" shortfalls.  At the height of their popularity interest rates were mid teens.  In those circumstances it is very difficult to know what to fund for long term goals.  If you want the funding guaranteed that might mean doing the calcs at, say, 4% and most would have thought that amounted to serious over-funding and would have been interpreted as overselling.  Therefore the concept of funding at higher more realistic (but not guaranteeable) rates such as 8% took hold.  But that has now turned out to be hopelessly optimistic and so people who funded for their pensions face shortfalls, similarly DB pension schemes face deficits and need increased contributions.  Likewise WoL policies have turned out to be seriously underfunded and contributions (premiums) need to be increased.  Was this properly explained?  Possibly not but we should bear in mind that the examples on the Joe Duffy show are a very tiny minority of the tens of thousands of these policies that were sold.  It seems that most people accept the actuarial realities of the vastly changed financial environment.


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## Steven Barrett (19 Jan 2016)

terrysgirl33 said:


> Endowment mortgage.



The biggest problem with endowments is that they were not reviewed regularly. When most of them were sold, interest rates were very high and so the assumed investment returns were also high. Interest rates and assumed returns came down drastically, meaning you had to put more money into your endowment policy to meet the capital sum requirement at the end. Most people continued with the same amount for the term of the policy and fell short at the end. 


Steven
www.bluewaterfp.ie


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## 44brendan (19 Jan 2016)

Wasn't the assumed return on endowments an average 6% over their lifespan? Very popular when first marketed in the 80's and mostly market on the basis that a 6% return was extremely conservative!!


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## Duke of Marmalade (19 Jan 2016)

44brendan said:


> Wasn't the assumed return on endowments an average 6% over their lifespan? Very popular when first marketed in the 80's and mostly market on the basis that a 6% return was extremely conservative!!


I think the way it worked was that 6% was used to calculate the premium but 8% was used to illustrate the surplus.  Also note that these rates are net of tax.


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## Bronte (19 Jan 2016)

trojan said:


> It may not be a good idea to cancel a term policy once the mortgage is paid off. Again confusion here as some people dont realise that the term policy is aseperate issue and is a requirement by law for a mortgage in most circumstances. Why does joe duffy not get an informed person to simply explain issues like this when they are raised. I thought it was ironic when he took the final ad break in this section there was a long ad for Irish Life.



But a term life insurance by it's definition ends at the same time as the mortgage.  Your premiums stop. In my case because I reduced my mortgage term my policy is continuing but it's a pittance in premiums so I just never bothered cancelling it. 

In relation to other types of life insurance policy, it's true to say that in general as one gets older one should not cancel them as the original premium tends to be a lot less than when you originally took it out when you were young fit and healthy.


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## Bronte (19 Jan 2016)

IsleOfMan said:


> It is well known that he reads the comments on Boards when his show is live and learns from it as he goes. Unfortunately for him Boards is off the air at the moment so he is left to flounder on his own.



I missed this.  Are you sure about this?


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## Leper (20 Jan 2016)

I listened to part of Joe Duffy's programme. Without rehashing both side of argument a very old lady was sold a financial product that when she could not repay in full she was hounded by the financial bods with ridiculous compound interest charges and fees which turned a relatively small loan into near full price of her house. 

Whether the lady knew what she was signing or not is the huge issue here.  Also, was the full extent of the product default explained properly to her?  I'm with Joe Duffy on this one.


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## Brendan Burgess (20 Jan 2016)

HI Leper

Are you responding to this thread?

* Bank of Ireland's Life Loan on Joe Duffy *
or did they talk about Life Loans again on the insurance programme?
Brendan


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## ClubMan (20 Jan 2016)

RMCF said:


> Just listening to the show again, and its so clear that the majority of the public do not understand different financial products.
> Callers are coming on and making incorrect statements and not being challenged on them. Many do not seem to understand the simple concept of what an insurance policy is for example.


A problem here is that at least some of the cases cited did not involve "simple" insurance policies but rather more complex/confusing/misleading combined life insurance/assurance AND savings/investment policies. At least some of which seem to have involved hard/misleading selling to (in some cases) uninformed punters.
But I agree that (a) more education/information is always a good thing and (b) Liveline isn't exactly the forum for balanced and informed/informative discussion of such issues.


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## Bronco Lane (20 Jan 2016)

Leper said:


> I listened to part of Joe Duffy's programme. Without rehashing both side of argument a very old lady was sold a financial product that when she could not repay in full she was hounded by the financial bods with ridiculous compound interest charges and fees which turned a relatively small loan into near full price of her house.
> 
> Whether the lady knew what she was signing or not is the huge issue here.  Also, was the full extent of the product default explained properly to her?  I'm with Joe Duffy on this one.



This must have been something that you thought you heard. 

I understand that she purchased a product in full knowledge with assistance from family. There was a solicitor involved also. She wasn't hounded by anyone. The interest rate charged was acceptable at the time by the purchaser. What fees were charged?


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## Brendan Burgess (20 Jan 2016)

I listened to the bit with John Lowe on it yesterday. He gave a good explanation, but unfortunately did not challenge the €20k turning into €185k nonsense. In particular, he gave a very good explanation for why Life Loans are a very good product. 

Joe Duffy 19 January   Transcript from 16.37  John Lowe 

Lowe: 

There are three types of life policy

·  Mortgage protection – reducing if you die while you have the mortgage, your mortgage will be paid off

·  Level term

·  Whole of Life – never going to end

If you want an investment aspect, it should be explained clearly, but it never is.

Putting the money in a credit union is not a good idea.

You only need life cover when you have dependents.  If they are in their 20s or 30s, they are not depending on you.

*Life Loans*

*Joe: A €20k loans has turned into €185k *

Lowe: They doubled every 10 years as a rule of thumb.

I went to a house in Torquay Road and it was a kip because they had no money.Their kids had a great time on the sales proceeds after the parents died. 

We have an ageing demographic

Joe: So you are saying that the life loans are a good product

Lowe: I would be quite happy to take out a loan if I had no income


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## Steven Barrett (20 Jan 2016)

Duke of Marmalade said:


> Joe was in fine form today.  Possibly the fruitiest was his shock at hearing from the person whose term assurance ended at age 65.  A scandalised Joe observed that after 65 was when you really needed life assurance.  He opined that life assurance at younger ages (when you had little chance of collecting) was nothing short of "gambling against yourself".  When Joe asked how much they got back when the policy terminated and was told zilch he became apoplectic.  He questioned how could (such gougers) need a taxpayer bail-out.
> 
> Just for clarification to those who might have accepted some of this, a term assurance to age 65 in the majority of situations would be an exemplar of good advice.  And of course Irish Life did *not* receive a taxpayer bail-out.
> 
> This was by a long way the worst performance I have heard from Joe.  His total ignorance combined with his gratuitous accusatory language seems to me should be legally actionable.



I haven't listened to the podcast (it will drive me nuts) but Joe is completely missing the point of life cover and when it is needed most. 

When you are young, your financial capital (your wealth) is low but your Human capital (your ability to earn) is high. The purpose of life cover is to protect your human capital. In the case of premature death, the life cover plan is to replace all that lost human capital. 

For older people, their human capital is low but their financial capital should be high, so if they die, there is enough wealth already there so their dependents are looked after financially. So while the chances of you dying at 65 is much higher than if you are 35, the financial consequences are much lower. 

Of course, life cover is also there to protect against debt too.


Steven
www.bluewaterfp.ie


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## Brendan Burgess (20 Jan 2016)

SBarrett said:


> I haven't listened to the podcast (it will drive me nuts)



Hi Steven

It will drive you nuts.

I listened to Monday's and I attach a transcript.

I had mistakenly thought that John Lowe was on.

Brendan


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## Brendan Burgess (20 Jan 2016)

Having listened to the programme, I now have a better understanding of why the Ombudsman upholds only 10% of complaints.

"Dear Ombudsman
I paid an insurance premium for 20 years.
I didn't claim.
But the insurance company is refusing to give me my money back.
It's a disgrace."

Brendan


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## Duke of Marmalade (20 Jan 2016)

A mantra is developing on the thread that "simple is good" and "complex is bad (or even deliberate gouging)".  It should however be noted that Joe reserved his greatest gasp of indignation on hearing of the guy who got zilch back on his expired term assurance.  Simplicity is therefore not a protection against Joe Syndrome which holds that all financial institutions are gougers and three card trick men.


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## Steven Barrett (20 Jan 2016)

Brendan Burgess said:


> Hi Steven
> 
> It will drive you nuts.
> 
> ...



Nope, I'm not listening to it! 


I'm well used to people asking me "what happens at the end?" when they enquire about life cover plans.

My reply is always the same "You go away happy that you're still alive to see the end of it"



Steven
www.bluewaterfp.ie


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## Brendan Burgess (20 Jan 2016)

SBarrett said:


> Nope, I'm not listening to it!



it is a transcript. You can read it in about two minutes.  I have edited out all the sighing.


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## Bronte (20 Jan 2016)

ClubMan said:


> A problem here is that at least some of the cases cited did not involve "simple" insurance policies but rather more complex/confusing/misleading combined life insurance/assurance AND savings/investment policies. At least some of which seem to have involved hard/misleading selling to (in some cases) uninformed punters.
> But I agree that (a) more education/information is always a good thing and (b) Liveline isn't exactly the forum for balanced and informed/informative discussion of such issues.



Because of the conflicting viewpoints on here I listened to this week's Monday show.

It was very clear to me that most people didn't really understand at all what they were signing up for.  These are my impressions

- Nobody read the terms and conditions
- Terms and conditions referred to as gobblegood
- Reliance on agents to explain the products
- Reliance on agents lies to tell them the premiums would never go up by much
- No understanding of the products
- No understanding of the savings verus life issue
- An expert confirmed the agents didn't understand the products right up until the ninties
- Sold to poorer people - paid by weekly collection by agent in general originally
- None seemed to understand the policies would be reviewed
- Nearly all seem to have been contributing for years and got nothing back
- Nearly all seem to have received a review letter with an impossible new premium calculation to pay

*Kieran - the experts comments
*
- Agents didn't understnad the products
- First 2 years of premiums = setting up fees, so nothing at all being saved (I presume he means commission to the agents)
- The next years premiums went in 'charges'
- Then eventually your premiums are going into 'savings' (seem to me to be 'investments')
- something about if you took savings you damaged ???
- Always allowed a review of the policy
- Life assurance a lot less for a younger person
- so complicated a solicitor would find it difficult to understand
- a mix up of savigns with insurance - that's the problem

My opinion

I think most people were duped into these products, they seemed to think they were doing the right thing for their families, to leave a little nest egg behind, something to pay for a funeral ( a lot of people have a pride in that in Ireland).  What I really didn't understand is how many of the products were so badly managed/invested that there was zero payout in so many cases.  I honestly could not figure out if these were death policies, life insurance, savings, seemed to be a bit of everything.

There was also a very big issue, I felt, about the fact it was impossible to take a mis selling case 30 years later when you discoer you've been sold a pup as it was clear most of the elderly people did not have a) the wherewithall to fight it b) the ability to fight it c) had dementia

Unlike the two articulate people on last week, with a different product, these people had no clue what it was they were signing up for.

Questions

- How man of these products actually pay out.
- Are their reliable statistics on these products
- Are these products just a licence to print money by life companies
- What is the regulation of them like
- Who looks out for vulnerable people that are clearly conned by these despicable hard sell people and companies behind them


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## Duke of Marmalade (20 Jan 2016)

Jayz!  Joe is at it again today

I looked up a leading life assurer's website today.  It seems the mixed savings/protection policies are no longer available.  That seems to me a step backwards.  Yes the product offering has been simplified but something has been lost.  Let me give an example.  I got the online quote for a 50 year old for 100K for 15 years.  That amounted to c.€30 a month.  I then got the Whole of Life quote for the same punter and that cost c.€120 per month.  Yes the offerings are very simple to explain (still no guarantee Joe won't see imaginary three card tricks though).  But let's say our putative 50 year old opts for the WoL cover but then when he retires at 65 decides he doesn't need that cover any more.  Then, in Joe's vernacular, that extra €90 a month he had been paying for the previous 15 years would be "down the toilet".  Under the mixed savings/protection version he would have got a substantial amount of those "extra" payments back as a surrender value.


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## Bronte (20 Jan 2016)

Brendan Burgess said:


> *Life Loans*
> 
> *Joe: A €20k loans has turned into €185k *
> 
> ...



Therefore a good rule of thumb is

20K borrowed = 40K after 10 years, 80K after 20 years and 160K after 30 years?

(shouldn't this be on the Life loan thread?)


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## Duke of Marmalade (20 Jan 2016)

A little advice for anyone who has one of these WoL plans and is say over 65.

1.  You should be assessing the situation now, not waiting for a premium review.

2.  This is complex but financial advice may not be cost effective.  Ask questions on AAM first as you might get the answers that way.

3.  First thing is to ask yourself what exactly are your requirements for life cover.  Many people in this age bracket do not actually *need* any cover.

4.  Assuming you need the cover (or some cover) for whatever reason it should be noted that generally cover is more expensive on these plans.  But that is for a reason, the reason being that you have what is called guaranteed "insurability" irrespective of your state of health.  Unless you can complete a "clean" life proposal form you may not be able to avail of considerably cheaper term assurance options.

5.  These policies were aka Flexible Whole Life policies.  And they were reasonably flexible.  You might want to reduce your cover.  Also despite the call to increase your premium or reduce your cover you often have the option to refuse both.  The catch is that the policy is less likely to last out your days.

6.  If you don't need any life cover then the obvious advice is to cash in for any value that might have built up. My only cautionary note is that for policies taken out before 2001 these are quite tax efficient savings vehicles. Through a process of benign neglect the tax on the income in these policies has remained at 20% whilst Exit Tax on any other long term savings or deposits has been increased from 23% to 41%.

7.  You may not need the cover but your health circumstances may be such that in Joe's crude metaphor you are on a good "bet" with the "bookmaker".  Stretching the metaphor the bookie would be delighted to see you "tear up your docket".  But the bet is no good to you personally so rather difficult dilemmas arise as to who should pay to keep the bet alive.

8.  Finally nobody likes to think they have been ripped off. You may have misunderstood your policy and indeed a salesman would have got handsome commission but despite what Joe likes to believe you have not been "gouged".


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## Monbretia (20 Jan 2016)

Coincidentally I just happen to be dealing with a query from a relative re an Irish Life whole of life policy taken out in 2005, this has been reviewed once already and the amount dropped, this year's letter is showing a drop from 57k of cover to 31k for same premium or to retain existing cover of 57k premium doubles from 440 p.a. to 880 p.a. 

Also says 'next review date may happen sooner if there are changes in any of the factors that affect the cost of your cover' so who knows how long there will be any affordable cover in this policy. 

Assumed fund growth rate is 4.30% p.a.   Now customer is a bit peeved as they wanted to get a few more years out of this policy, kids still in secondary etc, never really wanted it for WOL so don't know how that happened, term would have made much more sense in this case.


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## ClubMan (20 Jan 2016)

Duke of Marmalade said:


> A mantra is developing on the thread that "simple is good" and "complex is bad (or even deliberate gouging)".


On Liveline or here?
Just to be clear - I don't agree with that.
There are markets for all sort of financial products - from "simple" to "complex".
What's suitable/appropriate will always depend on the specific circumstances of the individual/family involved.
But a key problem here is that (it seems to me) that many of these combined life insurance/assurance plus savings/investment products were not explained or sold properly.
As long as a punter is given clear, accurate and reasonable info so that they can make an informed decision then that's fine.
E.g. "it's perfectly feasible that you will pay premiums on this product for decades, obtain the benefit of life cover but not get anything back by way of a maturity lump sum".
I guess it remains that (a) punters generally can't depend on the seller/tied agent for independent advice and (b) some will simply not engage with the facts/terms & conditions in which case (as long as the info provided is clear and accurate) it's hard cheese if they claim to be unpleasantly surprised years later.


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## Steven Barrett (20 Jan 2016)

Brendan Burgess said:


> it is a transcript. You can read it in about two minutes.  I have edited out all the sighing.



I saw an attachment and thought it was a clip.  

My two favourites:



> *Peter Dunne *
> 
> 30 year odd ago. €25k with Irish Life. Paid every month
> 
> ...






> Joe: People didn’t know what they were selling; there was three card trickery going on; and people were selling insurance to people who were already insured twice three times  - it sounds like the collapse of Lehman Brothers – CDOs.  People were betting on products which were bigger than – they were gammy any way.




Plenty of examples of the reviewable whole of life contracts too, which are rubbish. 


Steven
www.bluewaterfp.ie


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## Duke of Marmalade (20 Jan 2016)

_Clubman_  (welcome back) I agree with what you say.  But on this Flexible Whole Life thing I was surprised that none of the leading life assurer websites mentioned such a product.  If it has vanished from the scene, I think that is a step backwards for reasons stated earlier.  If it is still available but not on a mass market basis but only following sound unbias advice then that is a step forward.

I repeat an earlier point that the complainants on Joe's show are a very tiny minority and we can see that we can get complainants for even the most transparent and simple of propositions.  Maybe they are the tip of the iceberg but I sense that the great majority of people who purchased these policies broadly understood what they bought and few were thinking seriously about life cover in their 80s.


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## PMU (20 Jan 2016)

ClubMan said:


> But a key problem here is that (it seems to me) that many of these combined life insurance/assurance plus savings/investment products were not explained or sold properly..


  I disagree.  They were clearly sold as investment products and not as insurance products.

I have a copy of the original promotional brochure for Irish Life LifeSaver. It was sold as an investment product and not as an insurance product. The brochure is entitled 'LifeSaver Investment Account'. It states: “The LifeSaver Investment Account is a long term savings account.".  It then does on to say the LifeSaver account “gives you real growth potential by allowing you to participate in the profits earned by the highly successful Irish Life Managed Fund.” and “Your money is actively managed to maximise your return.” Note the  phrase “your return”.  Based on this, a person investing is such a product would have a reasonable expectancy that there would be a return on the product. The next page of the brochure shows the growth of a 50 IEP investment per month in the IL Managed Fund. The brochure shows someone investing 50 IEP a month at age 20 -30 getting an estimate encashment of IEP 27,650 after 20 years. So you would expect such a return, or even greater if you left your money in longer.  Then there is a lot of bumph on what a great company IL is (or was).
But based on this brochure any person investing in such a product (and I was one) would reasonably assume they were  investing in a product that invested in the IL managed fund. We now know that this was not the whole truth and in fact you were investing in a fund that fed into an insurance policy. Life assurance is mentioned in the brochure but as an “added bonus”.


.


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## Duke of Marmalade (20 Jan 2016)

PMU said:


> I disagree.  They were clearly sold as investment products and not as insurance products.
> 
> I have a copy of the original promotional brochure for Irish Life LifeSaver. It was sold as an investment product and not as an insurance product. The brochure is entitled 'LifeSaver Investment Account'. It states: “The LifeSaver Investment Account is a long term savings account.".  It then does on to say the LifeSaver account “gives you real growth potential by allowing you to participate in the profits earned by the highly successful Irish Life Managed Fund.” and “Your money is actively managed to maximise your return.” Note the  phrase “your return”.  Based on this, a person investing is such a product would have a reasonable expectancy that there would be a return on the product. The next page of the brochure shows the growth of a 50 IEP investment per month in the IL Managed Fund. The brochure shows someone investing 50 IEP a month at age 20 -30 getting an estimate encashment of IEP 27,650 after 20 years. So you would expect such a return, or even greater if you left your money in longer.  Then there is a lot of bumph on what a great company IL is (or was).
> But based on this brochure any person investing in such a product (and I was one) would reasonably assume they were  investing in a product that invested in the IL managed fund. We now know that this was not the whole truth and in fact you were investing in a fund that fed into an insurance policy. Life assurance is mentioned in the brochure but as an “added bonus”.
> ...


_PMU_ this shows just how much there was a disconnect between the product designers and the customer.  You seem to be financially savez and yet have completely misunderstood the proposition, that's the designers' fault, not yours.

A bit more background.  In the 1980s the Holy Grail of life insurance was the Universal Life concept. It came from America and it was made possible by developments in technology.  Historically life assurance products had been very simple and varied from simple term assurance to simple and non flexible endowment plans. 

Universal Life was meant to be the single product for life to meet all needs across the spectrum from savings to protection.  It was meant to be super flexible, adjusting to your needs as your life cycle evolved.  It could therefore be marketed under any guise from savings to protection.  You clearly read the marketing blurb for the savings package but were sold something different.

The whole thing was possibly ahead of its time for both seller and punter and from a cursory browse of current websites it seems the industry has reverted to simplicity.  As I stated earlier I think something has been lost in the process.


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## Dan Murray (20 Jan 2016)

A lot of lifesavers were sold as primarily investment only products. Even in cases where a client wished to establish an investment savings plan, there was an element of life cover attaching. There was a fiscal reason for this as where the sum assured was something like 15 times the annual premium, there was some element of taxation relief on the contributions (c.20%?). Someone with better recall will confirm the precise details. So it is completely plausible that PMU was marketed and sold primarily investment contract - with the "added bonus" of some life cover being included for the reason I have just outlined.

I have a pal who worked as an actuary for Irish Life who, to this day, feels guilty about the manner in which Lifesaver and similar products were designed. It is true that there is a disconnect between the product designers and the customers - and it's primarily because the actuaries designed a product with intentionally complicated structures (using approaches like initial and premium units) which were purposely structured to confuse the consumer. When, for example, Lifetime launched itself, its charging structure was based on having a period where no units were purchased for a specified initial period rather than adopt the then established charade of initial units. Such a charging structure is known more broadly as a "nil allocation period" approach. Of course, Lifetime did not call it so - referring to it as "a unit attribution suspense interval". You could not make it up.

The perfect storm then continues when the actuary's dodgy handiwork is distributed pretty exclusively (getting back, for example, to the Lifesaver) by those who probably benefited most from the primary reason for the dodgy design structure in the first place, the jolly salesman. Broadly, circa the first year's premiums went on commission and the second year's premiums went to the insurance company.

The combined efforts of actuary and salesman meant that there is no wonder the customer was regularly duped in the past in many different ways. I can recall various close shaves that I've personally had down the years where, were it not for, my poacher come gamekeeper actuary pal and another honourable soul, I would have been similarly duped by people purporting to have my best interests at heart.

Getting back to the man from Clontarf, the bits I've heard from Liveline have been dreadful in terms of quality. But I mean that's hardly surprising - it's tabloid radio. I kind of admire Joe - he comes from very humble stock, seems to be of ordinary intelligence - yet has managed to earn an out of the ordinary income for what seems like a cushy enough number. In that sense, he is more successful than most on this site. He has worked out long ago that he gets paid for outrage, like our actuary for obfuscation, our salesman for bull....


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## Bronte (21 Jan 2016)

Duke of Marmalade said:


> _PMU_ this shows just how much there was a disconnect between the product designers and the customer.  You seem to be financially savez and yet have completely misunderstood the proposition, that's the designers' fault, not yours.
> 
> .



I totally disagree with this.  It was done deliberately is my belief.  Total scam.


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## Bronte (21 Jan 2016)

Dan Murray said:


> . When, for example, Lifetime launched itself, its charging structure was based on having a period where no units were purchased for a specified initial period rather than adopt the then established charade of initial units. Such a charging structure is known more broadly as a "nil allocation period" approach. Of course, Lifetime did not call it so - referring to it as "a unit attribution suspense interval". You could not make it up.
> 
> .



Which to be fair to Joe Duffy he had an expert called Kieron on, and Kieron explained that to the listeners.  He said basically the first couple of years premiums went into the pockets of the Life company/commission for the broker and not into savings. (in a nutshell) But nobody buying these products knew any of this and designedly so.  (I posted the points Kieron made upthread)

Good description by you of Joe too.  I imagine the salesment's commission's this week are way down.


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## Dan Murray (21 Jan 2016)

Bronte said:


> Which to be fair to Joe Duffy he had an expert called Kieron on, and Kieron explained that to the listeners.  He said basically the first couple of years premiums went into the pockets of the Life company/commission for the broker and not into savings. (in a nutshell) But nobody buying these products knew any of this and designedly so.  (I posted the points Kieron made upthread)



Apologies Bronte - my post repeated ground that you had already, and more succinctly, covered.....


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## ClubMan (21 Jan 2016)

PMU said:


> I disagree.  They were clearly sold as investment products and not as insurance products.
> 
> ...
> 
> But based on this brochure any person investing in such a product (and I was one) would reasonably assume they were  investing in a product that invested in the IL managed fund. We now know that this was not the whole truth and in fact you were investing in a fund that fed into an insurance policy.


You disagree with me but make practically the same point that I was making!?!


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## Bronte (21 Jan 2016)

PMU said:


> I disagree.  They were clearly sold as investment products and not as insurance products.
> 
> I have a copy of the original promotional brochure for Irish Life LifeSaver. It was sold as an investment product and not as an insurance product. whole truth and in fact you were investing in a fund that fed into an insurance policy. Life assurance is mentioned in the brochure but as an “added bonus”.
> 
> ...



Any chance you could scan the brochure and post it up. 

What's you've said about the brochure ties in exactly with what the callers to Joe were complaining about.  They understood they were saving to have a little nest egg.  They trusted the agent/broker/hardsell and kept paying away over decades and all the cases I heard got nothing.


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## Dan Murray (21 Jan 2016)

Duke of Marmalade said:


> They died out in the early eighties.



Duke

This is simply not true - I just rang my pal to confirm.


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## Duke of Marmalade (21 Jan 2016)

Dan Murray said:


> Duke
> 
> This is simply not true - I just rang my pal to confirm.


Post corrected.


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## Duke of Marmalade (21 Jan 2016)

Dan, it has already been conceded that initial units had the potential to obfuscate.  Initial units had deffo disappeared from all the mainstream products like _Lifesaver_ by 1990.  Possibly yet another spin off thread is needed on initial units but it seems a tad off topic to Mick, Christina et al's complaints on Joe Duffy.


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## Brendan Burgess (22 Jan 2016)

Guys 

Stick to the facts and don't make personalised comments.
If someone makes a personal attack on you, ignore it or report it. Don't respond.

In particular, you are wasting a huge amount of time writing a long, well argued point and including a personal attack in it.  The whole lot will be deleted.

I do not have the time to edit posts - so I have effectively reset the clock, and you can resume the debate from the earlier stage.

Brendan


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## Dan Murray (22 Jan 2016)

Hi Brendan

Of course, you are totally right - the hand-bagging went a little far yesterday. Mea culpa, mea maxima culpa.

In summary, I think it's fair to say that a lot of the complaints on _Talk to Joey_ were unjustified and Joe played to the gallery because he is a master at understanding that there is no such thing as bad publicity - especially in his line of business - the ratings game. [Read: Operation Rules Liveline 1.01 - Be populist and otherwise cause as much controversy as possible without being sued!] However, there is also no doubt that consumers need to be wary, when purchasing financial products, that the providers and their agents can not always be trusted. The debate then is to what extent this last sentence applies.

So all I was really trying to say is that when the designers and distributors of products combine to mislead the consumer, very bad outcomes can arise. Just now, I did a search on this site on "initial units" - which threw up the following very informative link. Obviously, it refers to practices in a different jurisdiction, but I think there is no need for us to be overly parochial - the principle of uberrimae fidei ought to be universal. What is really quite disturbing is that the cynical, systemic and exploitative behaviour, as outlined in this thread, continues to occur to this day.

I genuinely recommend that if you are interested in this area that you take the time to read this thread as it exposes the murky side of the insurance/investment world. Of particular benefit is that the links to Quantum's brochure and contractual terms are still "live" for all to see. I will leave it to others to comment further - other than to say that I think it's noteworthy that Steven Barrett - one of, if not, the most regular and respected practitioner(s) within the AAM community, features prominently in the thread and agrees with its essence!
http://www.askaboutmoney.com/posts/1385897/

Bí cúramach a chairdre - bí an chúramach ar fád


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## Duke of Marmalade (22 Jan 2016)

The thread has gone quite off topic as exemplified by that last post.  I suggest it should be closed.  I certainly will not be making any further contributions to what promised to be a quite informative discussion.


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