Thousands of elderly and low-income policyholders are facing financial uncertainty after the cancellation of long-standing funeral insurance plans, with politicians and consumer advocates condemning the move as a betrayal of trust.
The Family Protection Plan, underwritten by Swedish firm Maiden Life Försäkrings AB and distributed through CMutual and Scottish credit unions such as Dalmuir Credit Union, will officially end at midnight on November 30. After this date, members will no longer be covered for funeral costs, leaving many who have paid premiums for decades without support.
The termination follows Maiden Life’s decision to exit the UK market. According to the Dalmuir Credit Union, more than 70 local residents had subscribed to the policy, believing it would guarantee funeral payouts of up to £10,000. “We know how upset and worried you are about losing this valued insurance cover,” the union said in a letter to members.
Across the UK, about 2,000 policyholders are affected. Many joined the scheme before it closed to new customers in 2009, contributing monthly premiums under the impression they were paying into a fixed funeral plan. In reality, the policy renewed every 30 days and could be cancelled by either party with one month’s notice.
Ann Sloan, 81, who had paid into the plan for 16 years, told BBC Radio 4’s Money Box: “Maybe I lived too long. If I would have died sooner, my family would have got £6,000 and that would have been enough to bury me.”
Politicians have criticised the handling of the termination. Douglas McAllister, Labour MP for West Dunbartonshire, described the decision as “an absolutely appalling way to treat my constituents,” calling for a compensation scheme. “I would expect CMutual and Maiden Life to contribute towards any compensation pot,” he said.
Paul Sweeney, a Scottish Parliament member, went further, labelling the move “deeply immoral and repugnant,” arguing it left “thousands of vulnerable, low-income elderly people high and dry.”
The Association of British Credit Unions Limited (ABCUL) said the policy’s withdrawal had caused “concern and distress” among members. “We recognise the concern and distress that this withdrawal is causing to affected members and we are working with our member credit unions to ensure that they can provide the best possible support for the individuals impacted,” a spokesperson said.
CMutual acknowledged that finding a replacement has proven impossible. “Despite our efforts to replicate this cover, regrettably no UK insurer is willing to offer cover on an identical basis,” the firm said. It added that about 70% of certificate holders had made at least one claim during the policy’s lifespan, with nearly 100% of the total value of premiums returned to members through payouts.
The Financial Conduct Authority confirmed it has no power to compel Maiden Life to continue coverage, as the policy is not classed as a regulated pre-payment funeral plan.
What are your thoughts on this story? Share your insights in the comments below.
