More than half a million people are trapped in life insurance that may force them to choose between unsustainable premium increases or devastating drops in money payments.
Controversial investment-related insurance policies were popular decades ago, but have since been abandoned by clients and companies after an explosion of complaints.
Because the policies are tied to investments, the insurance company can demand higher premiums from clients if the money doesn’t work.

Controversial investment-linked life insurance policies were popular decades ago, but have since been abandoned by customers and companies after an explosion of complaints.
And if they refuse to pay, the value of their claims can be reduced by tens or even hundreds of thousands of pounds.
However, around 541,000 policyholders were still paying millions of pounds for ‘unit-linked’ life insurance in 2018, according to the latest figures from the Association of British Insurers (ABI).
If policyholders keep up with annuity payments, plans guarantee payment upon the customer’s death.
But if the customer wants to stop making payments altogether, he is offered a “refund value,” which can be less than 1 percent of the money he has already paid.
Widower Malcolm Brown, 83, took a policy with his late wife, Cora, in 2003 and began paying their family £50 a month to receive £217,495 in damages upon their deaths.
Canada Life wrote to the couple in 2013 to say it would raise their monthly premium to £278 and that if they did not agree within 30 days it would reduce their payout to just £52,071.
But when the letter is sent to their home in Ascot, retired support worker Cora is ill with breast cancer, and former salesman Malcolm thinks she opened the letter and forgot to tell him about it.
He did not find the letter until September of the following year, a month after Cora’s death at the age of 74.
When Malcolm called Canada Life to say he missed the speech, the insurance giant insisted it was too late to reinstate his original payout — even though he was willing to pay the higher premiums.
He canceled the policy in December and reluctantly agreed to pay only £670.
“Canada Life showed me no sympathy and caused me a lot of distress and anger,” says Malcolm.
“This company should have gone out of their way to contact us when they were going to reduce payments so much, I can’t understand how one letter was enough.”
These plans work by investing some of the customer’s premiums into the funds. This has led to the policies being promoted as investment opportunities.
In the past, policyholders were often allowed to withdraw a limited amount of cash from their policies before they died – but this depended on the cash value of the policy and how long it was created.
In the early 2000s, the Financial Ombudsman received a flurry of complaints from policyholders who claimed they had missold their plans.

One email reader who paid more than £18,000 in premiums for a plan was offered a surrender payment of just 60p (file photo)
And in 2013, more providers abandoned these policies after the regulator clamped down on commission earned from the sale of investment products.
Today, there is only one unit linked life insurance policy left in the market, and it does not allow policyholders to withdraw any cash.
A Money Mail reader, who had paid more than £18,000 in installments for a plan with Sun Life Financial of Canada, was offered a surrender payment of 60p – just 0.003% of the money he had paid.
The 72-year-old, from Essex, has been paying £61 a month in installments for more than 25 years.
But the father-of-two, who did not wish to be named, has seen his payments drop sharply to just £18,320 from the original £100,000.
He was first asked to increase his premiums in 2008, from £61 to £115.50, or else he faced seeing his payments cut to £45,540.
Since then, he has turned down six more reviews, but has refused to accept surrender payments made by the company.
“Your surrender value is ridiculous, it’s an insult,” says the former construction worker. “It feels completely immoral.”
Other policyholders were left facing huge hikes in premiums in the late 1980s and 1990s.
Mae Stockhill, 89, a retired restaurateur, took up politics with Sun Life Financial of Canada in 1988 for £15 a month.
The mother-of-three, who lives near Doncaster, wanted a lump sum of £6,926 to pay for her funeral.
But she was now told that she would have to raise her premiums to £115 a month, or her payments would be reduced to just £1038.
And while May had paid out £5,655 over nearly 32 years, the insurance company offered to give her just £874 if she were to cancel the policy.
“My mother bought this policy in good faith and everything,” says her daughter, Jill Carlile [the insurer] Take advantage of a weak lady.
Last year, the financial ombudsman saw a 24 percent rise in complaints about whole-life policies compared to the previous fiscal year, with the majority of the 1,620 cases involving plans that could be audited, such as unit-linked plans.
‘It’s appalling that hundreds of thousands of people are trapped in unit-linked policies, facing the daunting choice of moving their money and losing fees, or risk staying put and watching the money,’ says Martyn James, of complaints site Resolver. drift away.
Canada Life declined to comment on the Malcolm Brown case.
A spokesperson for Canada’s Sun Life Financial said it believes an unnamed reader has been told how the plan works. He declined to comment on Mae Stockhill because her case is under investigation by the company.
An ABI spokesperson says: ‘The terms and conditions of policies should be clearly defined.
“When weighing options, obtaining independent financial advice can be important in making the right decision for your circumstances.”
f.parker@dailymail.co.uk
Some of the links in this article may be affiliate links. If you click on it, we may earn a small commission. This helps us fund This Is Money, and keep it free to use. We do not write articles to promote products. We do not allow any commercial relationship to influence our editorial independence.