Ned O'Sullivan (Fianna Fail) | Oireachtas source

It would be remiss of me to let it go without wishing Senator Whelan a happy birthday.

I want to raise the important issue of the alleged mis-selling of whole-of-life assurance policies, which was raised in the Dáil in the last week or two by my party colleague Deputy Michael McGrath, who received a lengthy answer from the Minister for Finance. Whole-of-life assurance is where an individual purchases cover that would provide a lump sum for his family, usually his spouse, in the event of his death. It is different from most other types of insurance in that it contains no investment benefit, or only a very minuscule one - there is no surrender value, as such.The problem is that whole-of-life policies are subject to review after ten years and subsequently every five years. The review is carried out by the insurance company. It has all the cards and the customer has no cards. The policyholder has to cough up the additional premium. I am not talking about a normal investment whereby every year we are given the choice of coming up a little extra with the cost of living or the price index or whatever. Some of these jumps in premiums are extraordinary.

I offer one example involving a person who took out one such whole-of-life policy when he was 50 years of age. His premium was €90 per month. The cover for his wife in the event of his death would have been €250,000, a good substantial consolation for the spouse. Some 12 years later, the amount payable to the spouse has risen to €300,000, in other words, by the sum of €50,000. Yet, the premium has gone from €90 to €700 per month, an absolutely shocking swingeing increase in the premium for this unfortunate. There are many others like him. According to the Minister for Finance, Deputy Michael Noonan, the Financial Services Ombudsman has received 836 complaints of mis-selling that he can be sure of. There are probably many more but he is certain of that number. These people are trapped. They have invested so much money after ten or 12 years, upwards of €80,000, €90,000 or €100,000 in premiums. Moreover, the premium could jump up next month or next year by a further couple of hundred euro per month. Where does that leave the customer? Most of them have to give up, bail out and stop paying. There is no recompense whatsoever and no lump sum for the spouse in the event of policyholder death. There is something radically wrong here. The ombudsman seems to be wary of getting involved. The Minister for Finance, Deputy Noonan, should take a personal, hands-on approach in this matter. Hard-working individuals, middle-class people in the main, who have worked all their lives, probably have a small pension and are keen to ensure a little comfort and something to look forward to for their families when they depart are being trapped into throwing away investments of €100,000 plus with nothing to show for it.