With Profits Life Assurance Policy - Cash in??

Kring36

Hi all,

My 1st post so please be gentle. (BTW not sure if correct forum??)

I am considering cashing in a With Profits Life Assurance Policy with Axa Sun Life in order to pay off a credit card debt.

The policy has about 8 years to run and costs £40 a month. The surrender value is about £2,600 and this would just about pay off a long term credit card debt (at 0%).

My question is should I cash in the policy to pay off the credit card debt?

Any views/answers appreciated.

Thanks

Kring

dunstonh

Depends on the policy. The PPFM for the AXA WP fund shows it to be a disgrace of a fund really. So future potential for real growth is limited.

However, the costs of getting could be massive. Wouldnt want to say if its best or not without knowing the penalties involved.

lindabea

You do not say how long the policy has been in force, but have you considered any MVR penalties if you cash it in. The growth potential could be rather poor to continue with this policy, options for you to consider are

1 Take a credit card with 0% interest and transfer your balance. Temporary measure.
2 Sell your policy. You may get a better return than cashing in.
3 Turn your policy into a paid up policy and put your £40.00 towards your credit card

These are the options I would consider. Can anyone else add any more?

Kring36

Thanks for your answers so far, appreciated.

The policy started in 1999, and runs until 2014 (15 years)

- How would I sell it as opposed to cashing it in: where can I enquire about doing this?

- Also what does turn it into a paid up policy mean? (sorry but I'm rather a layman on this)

- what are MVR penalties too?

I think I will end up cancelling the policy, really the question now is how to do this most efficiently.
Thanks again for any help. :A

Kring36

Do the companies that buy endowment policies also buy life assurance (insurance - never know the difference) policies too?

Looked around but can't find an answer.

Thanks

EdInvestor

Hi Kring

Does the policy have a
"Guaranteed sum assured" and "Declared bonuses"? If so, can you post the figures for these?Then we can get a better idea about it.

Kring36

Thanks,

Copied the "headings" from another post. (still new to this and can't believe the amount of useful info available! :j )

Company - Axa Sun Life
Guaranteed sum assured - £4430
Declared bonuses - £610
Surrender value - £2600
Monthly premium - £40
Maturity date - May 2014

Cheers,

Kring

Kring36

Just received formal surrender valuation from Axa.

Before I sign and send back, just wondered if anyone had any ideas about my options, principally selling the policy as detailed above.

Thanks for any advice.

dunstonh

The PPFM for AXA apparantly states (havent read it myself but another IFA told me a few weeks back) that the bonus rate cannot rise or fall by any more than 1% a year. So, even in the unlikely event that the bonus rate would increase 1% a year every year, its going to take many years to get a decent level.

As its a savings endowment and not a mortgage endowment, its unlikely anyone would be interested in the TEP market.

Kring36

Thanks for the reply dunstonh. It looks like I'll be signing the form and cashing the policy in then: useful lesson learnt.

Thanks for the feedback on my question. As I stated before I think this is a really great forum and I only wish I'd discovered it earlier!

Cheers :T

Kring

EdInvestor

Hi Kring

If you surrendered it and put the money in the bank @4% also paying in the premiums to maturity, then you should end up with 8,076, compared with a guaranteed value of 5040 if you kept it and little apparent liklihood of any useful bonus additions.

Looks like this one should be consigned to the great endowment scrapheap in the sky.