Old Mutual Dowment Policies Designed to inflate your premiums to diminish capital growth

During August 1994, I invested with Old Mutual through what was sold to me as an Old Mutual Flexi "Dowment" or “FLEXiUITKEER” investment portfolio with life cover and a Flexi Care supplement with hospital and medical benefits. During August 2017, I instructed my financial advisor to enquire about a possible capital withdrawal against this policy, which according to me, 23 years into an investment, is not uncommon, nor an unreasonable request.

Apart from Old Mutual taking three weeks to respond to a basic request to send the policy contract and signed proposal to me, I am nothing short of disgusted in the investment and cover values declared by Old Mutual. After 23 years of investing with Old Mutual, whom I up to now thought was a reputable investment company, the obvious methods app**** to deceive the consumer and various contradictions throughout the policy contract on closer inspection, is quite sickening.

Old Mutual’s ********* tactics deployed by inflating premiums far above market-related values, without increasing the cover in an obvious attempt to diminish capital growth in the accumulative investment account, is absolutely unacceptable and, in my opinion, nothing short of *****.

As I no longer trusted Old Mutual to manage my funds, I requested that the policy be surrendered so I can move the capital to another provider, Old Mutual had the further audacity to deduct 29.3% of the remaining capital value for what they called "recover the unrecouped expenses from the accumulated value on the policy". Whatever that may mean. In short, what Old Mutual does with these policies: There are two (sometimes more) products in one policy, one being let's say Life Cover and the other is an Investment account. The monthly premiums goes into a capital account where the life cover and costs are then deducted before the remainder goes into an investment account which should yield around 12% (according to their contract) growth. The scheme is then that the Life cover will reduce over time and the investment portion increase (as per their contract), or so one would think. Rather what they do, as your premiums escalate over years, the costs and insurance contribution/s escalates (far beyond market values while the cover remains the same as the time the policy was taken out) to such an extent that almost nothing of your premium (as little as 6%) goes into the investment account.

The effect of this is, after 23 years of contributing your hard-earned money towards a fund that you thought is growing in capital value, you find that the capital fund value is almost nothing and you were paying exorbitant money towards life cover, at very low cover.

An initial enquiry was lodged with them 26 September 2017 to which a senior administrator half-heartedly responded via a very unprofessional e-mail on 3 October 2017, basically confirming all suspicions mentioned above. The official complaint was lodged (not the easiest thing to do as they hide all direct email addresses on the website and only present you with a limited form) on 2 October 2017 to which they have not responded yet. I am awaiting their response and will take the matter further with the FSB, Ombudsman and South African courts, should they not come up with a reasonable form of remedy.

I requested the surrender, which Old Mutual said will only be done once the complaint is finalised. Naturally I objected and the policy has since been surrendered and moved to another provider.

I urge all customers of Old Mutual that have these "multi-product" (investment with cover) type policies to request a full history of the account from the inception date, to review your capital growth.