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CHAPTER 4

THE LABYRINTH

4.9.1An ‘Apparent’ Additional Benefit
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In the preceding Sections, we have decoded elements of the policy Provisions, Privileges and Conditions that are highly onerous on the consumer. None of these onerous elements were brought to our attention PRIOR to CONTRACT.

Another highly significant element of the Policy (that on the face of it appears gratuitous to the consumer) exists within the Provisions, Privileges and Conditions: BONUS.

The existence of this ‘apparently’ beneficial element within the Policy was also NOT brought to our attention PRIOR to CONTRACT.




The ‘Bonus’ is defined in Paragraph 11 of the Policy Provisions, Privileges and Conditions (refer to Document 6C of Appendix 1/6) as follows:

Provided that the Policy is still in force and the Accumulated Fund is positive, on such anniversary of the Date of Commencement of the Assurance as is sixty months from the Mortgage Repayment Date (hereinafter called the ‘Commencement of Bonus Date’) and on each monthly anniversary thereof the Company shall allocate to the Policy a number of Units (hereinafter called the ‘Bonus’) which shall equal in value at the then Bid Price the fraction percentage (arrived at by division of the number of years from the Date of Commencement of the Assurance to the Mortgage Repayment Date inclusive by sixty) of the value at that Bid Price of the Unit Account.


Again, the use of component parameters (Bid Price, Unit Account) not delimited within the policy Provisions, Privileges and Conditions yields an element (Bonus) that is indeterminate from the policy documents as provided.

The circumlocution of language, and the absence of punctuation, further frustrates the consumer in his effort to disentangle the end–meaning.


However, notwithstanding its aforementioned indeterminacy, the policy documents definition of Bonus effectively translates as follows:

Bonus will be allocated to the Policy each month over the last five years of the Policy –––– with a 15 year Endowment Mortgage Policy the value of the monthly Bonus will be % (i.e. %) of the value at the then Bid Price of the Unit Account –––– with a 20 year Endowment Mortgage Policy the value of the monthly Bonus will be % (i.e. %) of the value at the then Bid Price of the Unit Account.


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As there had been no mention whatsoever of ‘Bonus’, in any of the PRE–CONTRACT Representations or in any of the Mortgage Quotations, I took its meaning (on my initial reading of the policy Provisions, Privileges and Conditions) at face value, i.e. it was my understanding that ‘Bonus’ would be benefit achieved as a reward for keeping the policy active into its final 5 year period.

In effect, I believed the Bonus to be an ‘additional benefit’, i.e. additional to the Projected Surplus After Loan Repaid.


I continued in this belief after I received the letter from Irish Life (see Appendix 1/7) in June 1993 stating: ‘During the first year of the policy there is no investment due to the various start up costs like, stamp duty, commission and initial expenses.’


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Note! Depending on the individual Life Assurance Company, the manner in which Bonus is applied will vary between the various different types of Policies. In the instances cited in this website-book, Bonus is allocated to the Policy over the last five years of the Policy; and it is expressly stated within the Policy Conditions that it will be so allocated.

However, with other Policies, Bonus may be allocated annually (Annual Bonus) and/or at the Policy Maturity Date (Terminal Bonus); and there may be no guarantee that it will be so allocated (e.g. it may be dependent on extraneous factors, or it may even be discretionary).

Whichever is the situation, all of the issues exposed below with regard to the Policies instanced in this book will have comparable relevance.

 

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