Couple pays 83% more to keep existing level of cover

John and Philomena Russell from Dublin took out a Lifesaver Plan life assurance policy with Irish Life in 1985 when they were aged 43 and 40. The couple had three teenage children at the time.

Now the couple are angry with Irish Life as they believe they have been priced out of their policy. When the policy was reviewed in October 2000 the account value was negative and the Russells were obliged to accept an increase of 83 per cent on their premium to maintain the existing level of life cover.

Their monthly premium started out in 1985 at £22.00 (€28) and the policy provided a guaranteed minimum death benefit of £29,000 for Mr Russell and £10,000 for Mrs Russell.

Each year the Lifesaver Plan provided the Russells with the option of increasing the benefits available to them. Their premiums rose accordingly over 15 years to stand at £48.71 by October 2000. At that point the life cover was £64,987 for Mr Russell and £21,572 for his wife.

The Russells received a letter from Irish Life in October of last year saying that the company had conducted a review of its policy and noted that the current premium was insufficient to maintain their chosen level of life cover into the future.

The couple were given four options for continuing the life cover and had three weeks to decide which route to take. They say that they realised for the first time at that stage that their policy had no encashment value. Their choices were as follows:

1. Maintain the same level of cover but cancel the policy and replace it with a new four-year term assurance policy - new premium £88.95.

2. Maintain the same premium and replace policy with a new four-year term assurance policy - life cover reduced to £32,776 on the first life and £10,879 on the second life.

3. Maintain the same level of cover by increasing the level of premium in the existing policy by £90.80 per month to a total of £139.51.

4. Maintain the same level of premium within the existing policy by reducing the life cover to £21,487 and £7,072.

The Russells reluctantly chose the first option and now have a four-year term assurance policy which they feel they will not be able to afford to renew when they stop working.

Mrs Russell said she was particularly disappointed that there was no encashment value in the fund. "I have no pension and until we got that letter I thought of this policy as security for me at the end of the day."

The couple say they will take their complaint to the Insurance Ombudsman.