CR62 RA policy made paid-up – costs deducted
RA policy made paid-up – costs deducted
In this case the policyholder took out a retirement annuity policy in August 2000 with a premium of R1 546,00. The deduction of a marketing and administration charge on this monthly amount came to R974,00 per month i.e. 63% of the recurring premium during the first 2 years. This was disclosed in the documentation provided to the policyholder at inception. When the policyholder changed occupation and joined his new employer’s provident fund he wished to reduce the amount that he contributed to the retirement annuity to R150,00 per month. The charges reduced to R98,00 per month and after a period of two years to R3,09 per month. When the complainant sought to make the policy paid-up the paid-up value of the policy after four years and two months came to R8 926 after the complainant had paid R34 360 in premiums. (There was no recoupment of costs at that stage.)
These figures once again demonstrate the effect of the upfront costs which the insurers incur in setting up policies, due not only to internal costs but, also to the commission which they pay to intermediaries. Although the policyholder was understandably outraged at the extent of the costs, this office could not assist in the matter as the charges were deducted in terms of the provisions of the policy documentation.
The complaint could not be upheld.