Hi,

I (and a number of colleagues) have lifestyle insurance (accident, sickness, unemployment, life) taken out in mid 07 from AXA / the PostOffice, which has suited me and allowed some peace of mind against for the unplanned. Obviously the post recession risk assessment has hit and I've now received a letter today, notifying that the policy has now changed effective 21/05/09, in 3 key areas:

1. Its now 90 days "deferred" (60+30) until 1st receipt of any payment in the event of a claim, it was: 30 days.

2. Max insured benefit is now £1500 per month (or 60% of gross, whichever is smaller). Was: 2500 per month (or a similar % of gross, taking the lower value).

3. In addition, the premium per £100 protected has now also been increased

Or you **CAN** cancel the policy, termination of cover is obviously immediate.

I'd probably would have (for 100% peace of mind) paid an increased premium (within realistic boundaries) to keep the same level of cover and conditions. However now, in my view, and for my circumstances, the protection is effectively useless - in the event I'm unemployed I would hope to be back in work in some form in under 90 days anyway and if I receive a payment its not the amount of monthly protection I originally signed up for. Finding a new provider with a policy more along the original lines immediately causes 120 days of "cooloff", and these new terms really don't meet my requirements, but I don't seem to have any other options.

I'm assuming there is nothing that can be done to either salvage the policy, or probably more preferably now to manage a migration to another provider without incurring 120 days+ of cool off. I do see a hint towards "waived monthly benefit on insurance transfer into policy" but nothing in reverse. The key for me being a policy that meets (or nearly does) the original contracted terms, and gives the full peace of mind its designed to.

Any advice welcomed.

Similar situation here, signed up in the middle of Feb and received a letter on Saturday telling me of the 30% price hike and reduction in benefits. I feel completely scammed, frankly. My qualification period is not even yet up, but here they are rewriting the policy to make it effectively worthless to me. I am going to cancel, but to rub salt in the wound, they took another payment today. Even better, I can't get through to them on the phone (sales answer immediately but refuse to help in any way) despite repeated calls all day.

I accept the PO can change terms with appropriate notice, but to take monthly payments on a policy that could not payout, and will now never payout after I cancel is just too much. I will be making a formal complaint and will take it to the ombudsman and small claims if necessary.

I've also suffered from having the original agreement recinded and replaced with a policy that doesn't fulfill what I signed up to. It's also worth noting that there are contradictory clauses in the Lifestyle Protection Policy Document.

Policy Conditions:

Section 9 (1) states:

We may at any time change any term or condition of this policy including the premium payable by giving not less than 30 days notice of such change to you at your last known address

However, this completely contradicts the detail under Section 8, titled 'Changes to Your Insurance' (something that has recently occurred)

Section 8 (1) states:

The monthly benefit and insurance cover as shown in your schedule will remain unchanged unless you contact us and we agree to a variation.

This is very misleading, and generally fits with the overall bitter taste I am left with.

The schedule I had agreed was for £2,500 pm cover with a monthly premium of over £100. I have now been informed that the cover will only be for £1,500 ... so I've been paying for a policy that was never going to be honoured as I was in the 60 day qualification period. When I asked whether I could get a refund for the premium I had paid, I was told no.

Not at all happy.

I can understand why everyone is so annoyed at these changes that have been made, especially seeings as they only need to give 30 days notice to change any term and condition on the policy. However, i am not sure what everyone is hoping to achieve by saying how annoyed they are, because all of these changes are perfectly legal.

Barto, you state that the Unfair Terms in Consumer Contracts Regulations 1999 states that a contract is unfair if "There is a significant imbalance in the parties' rights and obligations", however i feel i need to clarify this directive.

The purpose of this act is to prevent insurers from imposing terms on a policy that would enable it to avoid it liability during the term of the contract. An example of this would be a term on a policy such as:

The customer shall give us written notice of any loss or damage with reasonable particulars within 1 month of the event occuring.

In the above situation, there are obviously certain situations that may have occured in the individuals life that may prevent them from notifying the insurer of a claim that soon. Therefore the above directive would say the wording should be changed to something like:

You must provide written notice of any loss or damage as soon as it is reasonably possible.

Like many of you, I work in the financial services sector and have come across a number of these type of policies and like most of them, Post Office do make you aware that this is a monthly renewable contract and unlike most other general insurance products (which are generally 12 monthly) can alter the terms at any point. I think this links to the point voiceofreason was trying to make that with motor insurance, after 12 months you can decide to continue or if you don't like the new terms, switch your provider. I appreciate that a number of people may now be in a position that prevents them from switching (e.g. those who have been told they are at risk), however this is again no different to when an individual has a pre-existing condition and can not switch their health insurance provider.

As far as what is reasonable, I don't think it is unreasonable for someone with insurance to expect changes to their policy given the current financial situation. If this was a 12 monthly policy and was up for renewal this month, people would not think twice about the changes. But as it is monthly and different to the norm, people seem to think that reasonable means little changes.

Maybe I am just an old cynic, but this is why I don’t purchase these types of insurances but rather keep a decent amount of savings away in case I am made redundant.

Hi - count me in as well, I too have had my first letter, although as yet haven't opened it as I know what it will say!!

Send Watchdog the link to this blog so they can see from themselves!!

I also echo the thoughts about 'voiceofreasons' comment - you haven't understood the issue as Barto says.

We understand how insurances work, we are not simple, however 2 major changes to a policy and putting the price up is a little outside the realms of reasonable they have now fundamentally changed the policy.

Good post. This 'fair and reasonable' in a court of law will stand up. My benefit has been slashed by a whopping 40% and my monthly premium has only been reduced by 22% this is neither fair or reasonable and i have taken this stance in my letter posted yesterday to Axa

Hi, count me in. I have just received my first letter back from AXA re my complaint. I have sent another complaint yesterday in writing which is a little stronger than the first complaint made over the phone. I strongly believe if there is plenty of support they may buckle for existing customers and change the policy for new customers.

I too am a victim of this scam. If this had been in an email from Nigeria it couldn't be worse.

I took out this policy over others fearful for my job after my wife was made redundant. Unless, I can transfer without any qualification period I am stuck with this insurance.

Obviously, legally they are entitled to extort money and change the policy because their actuaries were obvious to the market.

I'm going to write to Watchdog will anyone join me?

'Voice of reason' I think perhaps you should take some time to read and understand what the issue is here; for me at least, it's not so much that the insurance premiums have increased with risk; but the fact they have increased the premiums right at the time I have become eligible to claim, should I unfortunately need to. I've being paying a premium at a rate I was sold on the basis that after my qualifying period, should I become unemployed, I would be protected; to only have that protection that I was sold reduced and the premiums increased at the time it kicks in. Money for old rope as my Dad would put it.

This is not the same as car insurance (or flood - which I have very first hand experience with) as those insurance premiums do not increase during the length of the term paid for. Okay, sure; this is a policy which supposedly renews on a monthly basis, but that cannot be deemed fair when the policy still refers back to the original start dates when it suits.

Under the Unfair Terms in Consumer Contracts Regulations 1999 it is stated that a contract is unfair if:

There is a significant imbalance in the parties' rights and obligations'.

There is, I believe a significant imbalance; the policy is heavily weighted in favour to PO and not the customer (the above being one such example).

I do not believe that any reasonable person (as defined in law) would believe that the PO was not aware of these impending changes to the contract at the time it was sold; therefore the policy was mis-sold; I was enticed into buying a product on the basis of a promised level of cover that was never actually going to be provided.

Perhaps therefore you cannot be deemed a reasonable person; orperhaps you have a vested interested in the insurance business?

I think it is about time everyone took some time to learn about insurance.

When people don't claim the price goes down, when people do claim the price goes up.

Consider if their where a number of car thefts in your local area, the cost of your car insurance will go up and pehaps the terms will change to restrict cover. Consider if you have a house in an area that has been affected by floods in the past then the cost of your home insurance would go up and an excess for flooding would be applied. It's a calculation of risk!

The prinicple is the same with unemployment insurance.

Lots of people are claiming so the price has gone up and the cover reduced. I have the policy and have been expecting it.

By the way how many people were happy to take the £100 free cover that was on offer?

If you are that upset why don't you go elsewhere have you tried Churchill they hve a policy that I am consdering!

I am also in the same situation having taken out this policy in August 2006 in response to much advertised advice against individual policies with credit card companies etc.

My policy has always been to cover Accident, Sickness, Unemployment and Life Cover - monthly benefit £1500 - monthly premium £67.50 which is now due to be increased to £101.25

Aside from having the feeling that I have wasted over £2k on a policy unlikely to ever pay out - I am intrigued by the new charging structure as there seems to be a wide variance of new premiums being quoted for similar cover within the discussion thread so far?
Appreciating that premium rates are all based upon level of risk but I find it interesting that you now need to phone up for a quote rather than entering a few details into the Post Office website page as previously ~ no chance of any existing customers understanding how the new charges are made up I guess.

Also, in these difficult times when insurance companies have to actually honour their polices it seems ridiculous to drive away the people that maintain the cash-flow in order for them to do so. They have to recognise that the method that many employers are using to reduce the number of redundancies is to maintain or even reduce their employee salary levels. Therefore for most families, including my own, a steady stream of price rises from, for example insurance companies means that I have to make a decision based on my own view of risk.

Whilst I would prefer to maintain some level of cover I am honestly no longer convinced that this policy is worth the monthly premium - so much for the Peoples Post Office! I can't comment upon the continued role of the FSA - words fail me......

I took out this insurance with the Post Office in November 2008. Not long after the 60 day qualification period (where you cannot be notified of unemployment) I was notified by my company that there will be redundancied and I may be affected. I contacted the Post Office who confirmed that I am covered as the notification of redundancy was outside the 60 day qualification period.

Fortunately I have not yet been affected by redundancy and I have been in touch with the Post Office 3 or 4 times (by telephone) informing them of the progress with our company regarding further redundancies. I was told each time that I did not need to contact the Post Office unless I had received notification of redundancy.

Now my waiting period or "defered period" as they now call it has been changed from 30 days to 60 days.

My major problem is as follows:

I get made redundant and because of the changes I do not get paid for the first 2 months (60 days) and the first payment does not get paid until 3 months after my unemployment (90 days)

I cannot cancel this policy and take out another policy with another provider as I have now received notification of possible redundancy.

House gone, car gone, disasterous credit rating, maxed out credit cards, etc. etc.

Surely this cannot be legal?

I took up the insurance in the beginning of February and got the letter in the beginning of April.

Know someone who took the insurance by mid February but has not received any kind of notification yet... Wondering if he will get the letter by mid April, exactly when the 60 days are over...

The first person, Tom, I spoke to at PO explained, when questioned, that the reason for the change in policy was (and I quote) 'basically the reason why we've changed it was the policy was too good and we were losing too much money'

I truly do understand about the current economic climate however did they not so any sums or look at any risk factors? They have been heavily promoting this hybrid product offering £100 to £2,500 in cover since it launched in 2006 - when a competitor of MS stated:

"The introduction of this product by a trusted household name comes as a breath of fresh air to the payment protection insurance industry," said Nick White, head of personal finance at comparison website uSwitch.com.

Interestingly gohunter I raised your point with Trudy a senior representative who called me back after my complaint to the PO who had just quoted the same 30 spiel, I explained to her that it states a term or a condition, which I could understand however what they had done was completely rewritten the contract. When I said to her about exhausting their internal complaints procedure and going to the Financial Services Ombudsman she delighted in telling me that they had already run this past them prior to making the changes and they were more than happy with the changes they were making - what hope do we have!!!

I took my policy out in Sept 2008 and received a letter dated 31/03/2009 on 3rd April telling me about the changes that would take place on 3rd May.

It would be interesting to know the earliest date that anyone had their conditions amended; i.e. if anyone has received such a letter prior to anyone else taking out the policy; therefore proving that it was always their intention to amend the conditons of the policy from what they were sold as.