Selling a life insurance policy

MMCC

In May 1998 I took out a whole-of-life policy for £58000 at about £73 per month. The original policy was with Scottish Amicable but is now with the Prudential. At the time I was 51 years old. I agreed that the sum assured would increase each year to keep in line with inflation. However, after 10 years and a second policy review the premiums have risen to £251 per month for a sum assured of around £120,000 which I regard as too steep as I approach retirement. Apparently, each annual increase is regarded as an additional policy and has incurred charges each time.

I have spoken to the broker who sold the original policy who suggests that I cash in this policy and take out a new policy which is a fixed term policy for 20 years with a sum assured of £100000 and a fixed premium of £103.45.

My broker suggested that I would receive around £5000 form Prudential which was listed as the current encashmnet value of the policy. However, I asked him to check this out and he returned with the information that after various charges the value was more in the order of £2200.

Is there any way that I could get more for my current policy. I have paid in about £15000 though I recognise that this is largely to bear the risk of me dying.

What would you regard as my best option at this time? I cannot consider continuing my current policy which will continue to have 5 yearly reviews making it impossible to maintain. Should I opt for the term option which is predictable and which I think I can afford into retirement.

I would appreciate any advice on how best to proceed.

dunstonh

Is there any way that I could get more for my current policy.

No.

Rather than see a broker who will react to your questions, why not see an IFA who can see if you actually need the policy any more. Most people dont need it beyond retirement. Its possible you do and modern options are often much cheaper and have a variety of payment methods which are easier to stomach (e.g. the better ones have no investment element and are guaranteed. You can pay for a limited period and not whole of life whilst retaining whole of life assurance. you can even pay a single premium and get if over in one go and get it cheaper for doing so).

The other option is to see if the existing policy can be amended. maybe a reduction in cover or making it paid up until such time there is no penalties to draw it (assumption that there is at the moment but that may not be the case).