Momentum life cover cannot be trusted; your premium can jump by 140%

I entered into a contract with Momentum around 17 years ago. I chose carefully in order to get the required life cover and to be able to afford it for the rest of my life. Instead of choosing a cheap premium that escalates every year, I chose the more expensive “level premium pattern”. For the past 201 months I’ve been paying a premium of R236 for the R1 million life cover. Two weeks ago Momentum informed me they have reviewed the whole life policy and I have two options: reduce the life cover (for the same premium) or maintain the life cover for a higher premium: Option A: Cover of R1 million; new premium R283, escalating by 6% per year. Option B: Premium remains at R236 but the cover falls to R417 938.

Both these options are highly detrimental to me as client. With option B the effective cost increases by a whopping 139% ! Option A will force me into a premium pattern that increases every year and will probably become unaffordable in the next 32 or 30 years. It is astonishing that a client can be forced from a level premium pattern into a forced annual increase.

Momentum uses (and abuses) a clause relating to the “guarantee period”. In this case the premium was guaranteed for 13 years. It is standard practice in the industry to enable the insurance company to adapt if their assumptions are materially different from the real life outcomes. The extent of the proposed change is however breath-taking. The following questions arise: 1. Are the Momentum actuaries merely *********** or is the company consciously misleading clients? How can they get the initial assumptions so wrong? (Momentum is not willing to disclose the reasons for the increase. In response to my query they rep**** "they made a business decision”). 2. Can Momentum be trusted with long term financial products?

Momentum is not acting in the interest of the client. Momentum was very happy to collect around R47,000 in premiums but as I grow older and the likelihood is increasing that they need to fulfil their side of the insurance contract, they change the terms of the contract in order to avoid paying anything. That is what I call indecent profit.

My advice for prospective clients: be careful before you use a Momentum policy. Demand transparency regarding the increases after the expiry of the guarantee period. Other insurers might actually be willing to honour their commitments based on the initial terms of the contract.