Aviva Life & Pensions UK Limited · DRN-6242362

The complaint The estate of the late Mrs K is unhappy, in summary, that Aviva Life & Pensions UK Limited (‘Aviva’), marked her paid-up whole of life policy as ‘gone away’ and allowed it lapse with no value in 2017. We’ve corresponded with Mr K as the executor of the estate, so I will refer to him for ease throughout where I think appropriate. What happened I've outlined what I think are the key events and points involved in the complaint below. The reviewable whole of life policy that Mrs K had was taken out in 1983, on a second death basis. I understand premiums were last paid into the policy in August 1989 and after that the policy became ‘paid up’ with benefits that included a sum assured of £85,000. In or around 2009, Mrs K moved overseas and, in September 2009, Aviva sent her a letter which confirmed it had updated its records with her new address, the latter of which I understand stayed the same until she sadly passed away in 2024. On the same date in September 2009 Aviva also sent what it said was a precautionary letter to Mrs K’s old address, which asked her to contact it if she hadn’t moved and to ignore its letter if she had. Mrs K went on to successfully receive annual statements for her policy from Aviva to her overseas address up to and including her 2013 statement. And, amongst other things, the annual statements Mrs K received from Aviva just before and after she moved overseas suggested she review her financial arrangements with a financial adviser, said that the policy’s death benefit was £85,000 and that the following ‘current fund values’ were supporting this benefit: • 2007 statement – £22,102.18. • March 2008 statement – £19,452.57. • September 2008 statement – £17,206.84. • 2010 statement – £14,741.56 – this statement and those sent from this date onwards also said ‘Regular premiums have been made paid up’. • 2011 statement – £13,235.34. • 2012 statement – £12,136.62. • 2013 statement – £11,258.36. Mrs K’s 2014 annual statement, which reflected a fund value of just over £9,378, was returned to Aviva and marked as ‘Addressee gone away’ and ‘not delivered’ though. As a result, no further policy correspondence was sent to her by it. And, in September 2017, Mrs K’s policy lapsed due to having no fund value left. After Mrs K passed away, Mr K went on to complain to Aviva on behalf of her estate, in summary, that:

-- 1 of 5 --

• He’d recently been told Mrs K’s policy ended due to non-payment, but this is incorrect given it was ‘paid up’. She’d understood this meant no further premiums were needed and there was no indication this would need to change in future. • It isn’t reasonable that failed delivery of one letter led to her correct address being removed from the policy. And if not for Aviva’s error surrounding this the policy would still have been in force when she passed away. • If Aviva had made adequate checks, it would have seen Mrs K had a pension in payment with it and been aware from this that her address remained the same. • Aviva’s failure to do so resulted in the loss of Mrs K’s ability to make required payments to keep the policy running – she wasn’t told premiums were now needed to or how much it would be to ‘top it up’. Mrs K was unaware her policy had lapsed and Mr K is unhappy and upset to find this out. Aviva sent Mr K its final response to the complaint and, unhappy with this response, Mr K referred the complaint to our Service. And, across its correspondence with Mr K and our Service on the matter Aviva said, in summary, that: • As part of its process, upon the 2014 statement being returned to it the address on Mrs K’s policy was removed as a security measure. It wouldn’t send correspondence to where a customer potentially no longer resides, as that would breach GDPR, so it removed the address while it carried out a tracing exercise. And that this is even more relevant for an overseas address where the checks it can do are fewer. • An Equifax check it then carried out in December 2014 came back with a low score, so Mrs K’s address wasn’t updated to reflect the results. Further tracers completed in May 2016 and December 2017 had negative results. And it can’t comment on why attempts weren’t made to contact Mrs K by email or phone in 2014. • Mrs K’s pension is on a different platform that it doesn’t have access to. Albeit it should have been able to trace this given it is held within the same business, so this was a mistake on its part. And it offered the estate £150 in compensation for not updating Mrs K’s address. • No premiums had been paid into the policy since August 1989. The policy terms set out the consequences when these aren’t paid. The process is that Aviva will issue arrears letters (it no longer has those sent to Mrs K due to the passage of time) and for the policy to be reinstated outstanding premiums must be paid within 12 months of the due date of the first unpaid premium. But, as none were received, Mrs K’s policy became paid up after 12 months from when the last premium was received. • As Mrs K’s policy became paid up, no payments into it were due and it isn’t possible to reinstate a policy once the above 12-months lapsed – although if it had been then the monthly premium to maintain Mrs K’s benefits would have been around £160. And it continued to provide the benefits until her fund value ran out and the policy lapsed in July 2017 in line with the policy terms. Although it couldn’t send a confirmation letter due to the address issue. • It apologised that Mr K had only discovered what happened after Mrs K passed away, causing him upset during a difficult time. But it said that, as it hadn’t received any premiums for years, this meant the fund value had been used up. Our Investigator upheld the complaint. They said Aviva unreasonably removed Mrs K’s address on receipt of one returned letter and after making unreasonable attempts to trace her to verify this. They said that when Mrs K stopped receiving correspondence her policy still had a good fund value, she knew it was paid up and required no premiums. And Mrs K then wasn’t warned that she needed to make further payments to maintain the benefits to stop the policy lapsing, when she would have otherwise likely done so due to her strong financial position. So our Investigator asked Aviva to pay Mrs K’s estate the sum assured of £85,000 plus interest, less the premiums she would have otherwise paid from 2017.

-- 2 of 5 --

As no agreement could be reached, the complaint has been passed to me for a decision. And I issued a provisional decision – which is largely set out again below – which explained why I won’t be asking Aviva to do anything. While Aviva accepted my provisional decision with no further comments to add, Mr K didn’t agree. He said, in summary, that: • In 2009, he called Aviva when Mrs K’s husband passed away about the policy just being in her name now and it told him that the sum assured remained intact and no premiums were due. So Mrs K felt reassured that her policy continued to be self- supporting and wasn’t at risk of imminent failure. It’s unrealistic to think she knowingly accepted its eventual lapse, and that she wouldn’t have sought advice and explored alternatives had she later been informed of the accelerating and inevitable fund depletion. • The policy was unfit for the purpose it was bought and intended for. And a business shouldn’t issue policies which can’t be adapted for those who outlive the supporting fund, without being able to preserve cover, as that places longevity risk on the customer while depriving them of informed choice and is unfair. • The conclusion Mrs K likely wouldn’t have done anything differently is speculative. There’s no evidence she’d have allowed the policy to evaporate when she had financial independence. She didn’t act was because Aviva kept her in the dark due to the lack of correspondence and because she thought no action was needed. What I’ve decided – and why I’ve considered all the available evidence and arguments to decide what’s fair and reasonable in the circumstances of this complaint. Having done so, while I appreciate Mr K will be disappointed, I’m not asking Aviva to do anything for largely the same reasons as those set out in my provisional decision, which I’ve repeated again below. I’ve taken into account the law and regulations; regulatory rules, guidance and standards; codes of practice; and (where appropriate) what I consider to have been good industry practice at the relevant time. While I’ve carefully considered the entirety of the submissions the parties have provided, my decision focuses on what I consider to be the central issues. The purpose of my decision isn’t to comment on every point or question made, rather it’s to set out my decision and reasons for reaching it. Where the evidence is unclear, or there are conflicts, I’ve looked at the evidence we do have, and the surrounding circumstances, to help me decide what I think, on balance, is likely to have happened. It isn’t in dispute that Mrs K’s policy became paid up with no further premiums due in 1989. And neither have I considered what happened at the time the policy was sold in respect of whether this was fit for the purposes Mrs K took it out for. Instead, my decision addresses what I think is the crux of this complaint, being that Mr K feels Aviva didn’t do enough to trace Mrs K following its ‘gone away’ letter in 2014 and he feels that, if it had, she’d still have had cover when she passed away. In respect of Mrs K’s address, it was reasonable for Aviva to take precautionary steps when her 2014 statement was returned to it. But the evidence of the 2014 trace Aviva carried out

-- 3 of 5 --

shows it used Mrs K’s previous address instead of her most recent overseas address. And it isn’t in dispute that Mrs K had an Aviva pension that it was still corresponding with her about at that address, which Aviva has recognised it should have found when running traces and that not doing so was a mistake. In addition, Aviva didn’t attempt to contact Mrs K via other methods when I’d have reasonably expected it to, such as, phone, email or by sending a further precautionary letter like it did in September 2009. As a result, Mrs K didn’t receive policy correspondence from Aviva beyond 2013 or know her policy lapsed in 2017. So, I think Aviva got things wrong, which I note it accepted in its final response letter. That being said, having considered all the available information, I’m not asking Aviva to do anything. This is because, on balance, I’m not persuaded Mrs K (and her estate) would likely be in a different position now if Aviva had sent her the policy correspondence it should have beyond 2013, for the following reasons. When asked what options (if any) Mrs K would have been given had she been sent this, Aviva said that while she’d have been sent annual statements, as the policy was paid up she wouldn’t have been sent reviews with options to maintain the benefits. And neither would Mrs K have been asked to, for example, start paying into the policy again when her fund value declined prior to 2017. Instead, Aviva said a paid up policy lapses when there’s no fund value left, with no option to continue with it. And that if Mrs K had been sent a policy lapse letter in 2017 this wouldn’t have given her any options, it would have simply confirmed this had lapsed due to non-payment of premiums and the fund value having eroded. I think Mrs K’s policy terms and conditions support this and that it’s worth explaining a bit more about how a paid up policy works. The policy terms explain that the type of reviewable policy Mrs K had could become paid up due to, for example, a policyholder choosing to convert this to a paid up one or where premiums went unpaid without notification then, in circumstances such as those set out in Aviva’s final response letter, it would be converted to a paid up one. Either way, as Mrs K’s policy was converted to a paid up one, with no more premiums paid into it, the benefits were supported by the existing fund value. And the fund value and its ability to do that would reduce over time due to the policy costs Aviva was entitled to deduct from that, which significantly increase the older a policyholder gets. The policy terms explain that when a policy becomes paid up the review provisions – which said reviews would be carried out throughout the policy term to determine the options required to maintain the benefits – cease to apply, meaning Aviva no longer needed to let Mrs K know her options to maintain these. And that the options to vary the fund and the sum assured, for example, will no longer be exercisable. The policy terms also say that if a paid up policy’s fund value is insufficient to meet policy costs then it will lapse without value, in the way Mrs K’s did. This isn’t unusual in my experience of this type of policy. And it isn’t unusual that there is no provision to later convert the policy back to one that wasn’t paid up to allow the option to maintain the benefits again. In summary, I’ve seen nothing to suggest Mrs K would have been able to inject more into the policy to maintain its benefits if Aviva had sent her policy correspondence beyond 2013 – Aviva hasn’t said otherwise when I asked it to let me know if I’d misunderstood in response to my provisional decision. Instead, the evidence suggests that, as Mrs K’s policy was converted to a paid up one her ability to do so was no longer an option, which meant this would have always lapsed in the way it did in 2017. And, in any event, I’m not persuaded that Mrs K (and her estate) would likely have done anything differently in the circumstances. Based on what Mr K has said took place during his call to Aviva in 2009, it seems it correctly told him the policy benefits remained intact with no premiums due upon the policy being

-- 4 of 5 --

transferred into just Mrs K’s name, given that was the case at the time. It remained that the future and continued provision of such benefits depended on the fund value though. And, in any case, as set out above, the annual statements Mrs K did receive, and which she continued to receive after the above 2009 call and until 2013, said that her fund value was supporting her benefits and showed that this value was significantly eroding. While Mr K has said Mrs K would have sought advice and explored alternatives when the fund depletion became more inevitable beyond 2013 had she been sent policy correspondence then, her statements already showed that the fund value had reduced every year since 2007 by around £1,000 to £3,000, and from £22,000 to £11,000 in the six years between 2007 and 2013. So, I think the statements Mrs K did receive gave her enough information to know that her fund value, while still around £11,000 in 2013, was likely to continue to erode and only support her benefits for a limited number of years, rather than for the rest of her life in the way I think Mr K has suggested she wanted. And, despite this and the statements having also suggested Mrs K seek financial advice in respect of her objectives and the policy, she didn’t take any action to support her protection needs, such as querying whether she had any options with Aviva, seeking advice or exploring cover elsewhere. So, I’m not persuaded that Mrs K would have done anything differently if she had received policy correspondence beyond 2013. Instead, in the circumstances it seems likely to me that Mrs K would have continued with her Aviva policy in the way she had and that this would have lapsed in the way it did. I think it’s also worth noting that, even if I did think Mrs K would have explored alternative cover elsewhere beyond 2013, life insurance becomes significantly more restrictive and expensive with age. Mrs K would have been in her mid to late 80’s beyond 2013 and we can’t know what type or level of cover she would have been offered (if any) elsewhere or if that would have been on terms acceptable to her. While I understand Mr K’s strength of feeling and that this will be very disappointing for him, I’m not asking Aviva to do anything for the above reasons. My final decision For the reasons given above, I’m not asking Aviva Life & Pensions UK Limited to do anything. Under the rules of the Financial Ombudsman Service, I’m required to ask the estate of Mrs K to accept or reject my decision before 21 April 2026. Holly Jackson Ombudsman

-- 5 of 5 --