asked the Minister for Industry and Commerce if he will make regulations regarding the advertisement of life insurance policies; and if he will ensure that any person investing in such a policy which claims to pay a dividend will not incur a serious loss due to inflation.
Ceisteanna—Questions. Oral Answers. - Life Insurance Policies.
25.
My Department have received hardly any representations about advertising of insurance policies and it is not my intention at present to make regulations such as the Deputy suggests. I do not think there is any known way in which it can be ensured that people taking out life assurance policies will never incur a loss due to inflation.
What about indexation?
It came to my attention recently that a person who had a life assurance policy, allegedly earning bonuses every year, got a notice saying that his bonus this year was so much. When he went to surrender that policy, he was offered approximately the same amount which he invested, even though he had been investing over the last 25 years and the buying power of £1 25 years ago and £1 today differ widely. Surely there should be some protection for people taking out life assurance policies when they are young.
The problem is that these policies are funded by the investments made by the companies. If the companies are working in a falling equity market and their investments are worth less, they are in some difficulty. It is not a matter which the Government could step into with a view to ensuring that the value was indexed. This is a matter for the companies themselves and for the consumer to make the best deal he can with the company that can offer the best terms and has the best policy in relation to the investment of its portfolio.
The Parliamentary Secretary must be aware that a young man starting out in life may take out a life assurance policy to protect his wife against the mortgage and so on he raises on his house. The companies are making a profit on that money over all those years, yet when the young man tries to surrender the policy he finds he is at a loss. Surely the State should protect him?
If there is any indication of a consumer being the subject of abuse by a company I will have the matter investigated but the Department have not received any such complaints.
Move on the legislation.