Is it legal to change benefits payable on Illness Benefit Policy?

[Cashstrapped]

Hi, hopefully someone here can answer this query for me.

When I took out my mortgage 5 years ago I also took out Insurance to cover mortgage payments should I become ill to a value of €1200 a month and have been paying a set premium for this benefit every month. This was done through my mortgage provider and the Insurance Company changed in 2006 and I received a letter advising me of this, literally a one liner saying that the Policy is now being managed by X instead of Y. I did not adjust my policy or my mortgage repayments when put on a 4 day week by my Employer early in 2007 as I did not see any reason to do so as my mortgage payments remained the same (on fixed rate for 3 years coming to an end mid year).

Now that I am making a claim due to being out of work due to sickness the new Insurance Company has requested 3 of my last payslips (these will of course show a reduced salary due to my 4 day week) so that they can work out the percentage of my illness benefit under my insurance. I queried as to why they were needed as I was paying a premium every month to Insure me for €1200. She advised me that they were the payments payable by the old insurance underwriter (think thats the term she used) but that they (the new Insurance Company) calculate the payment due based on your current salary.

To me this appears to be a change in the Terms and Conditions of the Insurance Policy I took out to cover off my mortgage in case of illness etc. Is this legal? If I had been aware of a change of the Terms and Conditions I would have advised them of the change to a 4 day week which in turn should mean a reduced premium payment due to them every month if the benefits have reduced.

Can anyone confirm if what she is saying is correct?

 

[Ravima]

read your policy terms and conditions. many of this type of policy pay a percentage of your last P60 earnings. you cannot collect more from the insurer than you were earning, and they wil lalso take into account any disability/social welfare benefit you are getting.

 

[agapanthus]

would that policy be a joint one by any chance, sounds like it might be as some of them were previously based on total sum insured, in this case 1200, but in the case of a claim it was paid out in the same percentage as your salary contributed to mortgage. in other words if for example both parties were earning 30k p.a. and equal contributors then if one was out of work 50% of claim, ie 600 was paid. If one earned 10k & one 30k then if 10k person was out of work, 25% of claim was paid or if 30k person then 75% paid. Sounds complicated and new policies arent done that way any more but some of the existing ones are still on that basis.

 

[Cashstrapped]

would that policy be a joint one by any chance, sounds like it might be as some of them were previously based on total sum insured, in this case 1200, but in the case of a claim it was paid out in the same percentage as your salary contributed to mortgage. in other words if for example both parties were earning 30k p.a. and equal contributors then if one was out of work 50% of claim, ie 600 was paid. If one earned 10k & one 30k then if 10k person was out of work, 25% of claim was paid or if 30k person then 75% paid. Sounds complicated and new policies arent done that way any more but some of the existing ones are still on that basis.

Thanks agapanthus, you are indeed correct, they contacted me today to go into it in detail and if does make sense alright.