CR63 RA policies made paid-up – costs deducted


RA policies made paid-up – costs deducted


The complainant took out 2 RA policies in February 2000 with a term for 25 years. In November 2002 he needed more life cover. He instructed his broker to obtain a quote from the insurer. The answer from the insurer confused him i.e. that his wish to increase his cover was regarded as a change to the contract and therefore he would be penalised. The insurer could not tell him by how much he would be penalised. He then wanted to know the actual cost of his existing life cover. He struggled to obtain an answer. The more questions he asked the more mistakes were made. The result was that the complainant decided to discontinue premiums while he sorted matters out.

He had at that stage paid R183 206 in premiums. The insurer made the policy paid-up and advised him that the paid-up value was R43 577. The complainant then lodged a complaint with our office because of the low value. The insurer advised that in making the policy paid-up it had deducted all unrecouped expenses. Part of the premium had been used for risk cover.


We had meetings with the insurer and the complainant. The insurer tried to convince the complainant to continue with his policies but after the poor service he received he was understandably reluctant to do so. The insurer eventually settled the matter on the basis of writing back all the unrecouped expenses, which by that stage amounted to R105 048, and making the policies paid-up.


The complainant accepted this settlement.

October 2005