Michael D'Arcy (Wexford, Fine Gael) | Oireachtas source

Last year the Department of Finance insurance policy team sought information from the Central Bank on the nature and workings of this type of insurance product. The Central Bank has advised that whole-of-life insurance policies are designed to provide consumers with life cover for their whole life. As long as the policyholder makes regular payments and the payments are sufficient to maintain the chosen benefits, under this type of policy a lump sum will be paid on the death of the policyholder.

Regular payments under the plan cover the cost of providing the chosen benefits. In the early years payments are higher than the cost of the policyholder's benefits, with the extra money paid going into the plan fund. However, protection benefits become more expensive as policyholders get older, with the result that payments into the plan begin to equal the cost of the chosen benefits. In the latter years of reviewable protection plans the cost of the benefits increases significantly. In order to keep the level of benefits at the current level of payments, the difference is made up from the plan fund.

In order to determine whether the consumer's regular payment, plus any fund which has been built up, is enough to cover the chosen benefits for the reviewable protection plan, the insurance company carries out regular reviews of plans. They may be completed every five, six, ten or 12 years, depending on the product involved.

During such a review, the insurance company may find that the consumer's current level of payments is enough to maintain the level of cover which the consumer wants. However, the insurance company may also find that the current level of payments is not enough to maintain the level of cover desired. I understand it is generally following these reviews that some people, particularly those who are more elderly, may find that their level of payments is being increased. This invariably places some of these individuals under increased financial pressure.

I encourage people who are dissatisfied with the outcome to go to the Financial Services and Pensions Ombudsman. The Financial Services and Pensions Ombudsman Act 2017 was amended to provide for changes to the six-year rule for long-term financial products, which are products with a term of five years and one month or more. A six-year limit normally applies in all cases. This means the ombudsman will not investigate a case arising from events that happened over six years ago.

However, for long-term products, a person may now make a complaint to the ombudsman within any of these following limits: six years from the date of the conduct concerned; three years from the date at which the person becomes aware or ought reasonably to become aware of the conduct; where it appears to the ombudsman that there are reasonable grounds for a longer period that would be just and equitable in the circumstances. The time limit can be extended.

I know of these cases. There are too many of them. In my view there was a mis-selling of a product to people especially when they get older and when the review kicks in. On too many occasions I have seen these presented to me and in effect if the person continues paying it means that it would be so expensive the insurance company will take all of the product from the person in the next five-year period rather than pass on anything if somebody passes away which is the term of the actual product that the company sold. This is a very live issue about mis-selling of products and it should go to the Financial Services Ombudsman and Pensions Ombudsman.

See this speech in context