Axa Multiplan Life Assurance

elliok1

Hi

I'm after some advice on behalf of my mum. She took out an Axa Multiplan in 1988 which is providing a lump sum of £75000 on death. The premium is currently approx £45, but increases each year by 5%. The policy has a surrender value of approx £2500 at the moment.

I've been asked if this is a good deal, or worth keeping so I've looked into it and I'm not convinced its worth keeping. The way I see it is as follows....

She's currently 56, married with both parents working so the £45 is not a problem, but in the future once they're retired the premium will become less and less manageable, particularly because of the annual 5% increase.

Norwich Union are offering a 30 year term insurance at a guaranteed £35ish a month.

It looks to me that she'd be better off surrendering the policy, and taking up these guaranteed premiums? I appreciate she's trading an Assurance policy for an Insurance - Is that a particularly bad idea?

dunstonh

Multiplans are whole of life so will pay out on death. Term assurance will pay out if you die within the term. Not after. So, its not quite like for like and you would expect a term assurance to be cheaper.

I appreciate she's trading an Assurance policy for an Insurance

Both are still assurance (unless the life assurance coverage is cut down and only paid out certain conditions. In which case it then becomes insurance).

Multi-plans are obsolete by todays standards. However, the higher premium cost may be due to the fact the investment element exists. The term assurance will be cheaper as there is no investment element.

Also, is there any reason why the policy needs to go on for 30 years (and are you sure NU will insure beyond age 75 on a level term assurance - not checked NU's but most have a maximum age point)?

elliok1

Thanks for the reply, I obviously worded my question badly as your reply is what I was trying to say!!

No reason why 30 years, other than it seemed comparable to a whole of life policy - I know this is a pure guess so not comparable at all, but hope you know what I mean!

I will check the terms with NU, the quote was through moneysupermarket, but I didnt follow the link through so that may be misleading. To be honest, cover to age 75 would probably be adequate.

I did try looking for a cheaper whole of life policy but couldnt find anywhere quoting this through the comparison sites? They seem to cater more for term or decreasing.

Have these multiplans become obsolete because they are expensive for companies to offer so have been withdrawn, or because there are more suitable products available nowadays?

Thanks again for the reply. I appreciate the info.

dunstonh

No reason why 30 years, other than it seemed comparable to a whole of life policy - I know this is a pure guess so not comparable at all, but hope you know what I mean!

NU do a whole of life assurance that you can choose to pay for limited periods (or even a single premium). If WOL is really required then it may still be an option with a modern plan with no investment element and guaranteed premiums.

Most people find their need for life assurance ceases after retirement although retirement provision will impact on that somewhat.

Have these multiplans become obsolete because they are expensive for companies to offer so have been withdrawn, or because there are more suitable products available nowadays?

Better products with more options and lower charges.

crazyeyes_2

I am too have similar dilema the only things is they are offering :eek: £281 :eek: surrender after 18 years of payments; as per the posting above can afford it now, but not when I retire and disgusted at the £281 offer so reluctant to cancel any suggestions?

grogdog

crazyeyes wrote: »

I am too have similar dilema the only things is they are offering :eek: £281 :eek: surrender after 18 years of payments; as per the posting above can afford it now, but not when I retire and disgusted at the £281 offer so reluctant to cancel any suggestions?

crazyeyes, th multiplan is not a savings plan and shouldnt have been sold as such, it could have been set up in 1 of 2 ways standard or maximum , standard being the one that built up a fund value which would be used in later years to absorb any premium increase so that the prmium should always stay the same, or on a maximum basis where you got the maximum cover for a premium guaranteed for 10 years then premium would likely increase significantly. you probably have th later and will soon not get the samee cover for premium you are currently paying.

but as i said at the start it is and never has been a savings plan.