Britannic Capital Builder - Deal or No Deal?

Mean_Scot

Hi Everyone,

I have a 10 year Capital Builder policy with Britannic which I took out 9 years ago (due up in August 2007). I have just asked about surrender value and been told this would be just over £5k. I have asked about maturity value and been told this could be between £6,200 and £6,560. Basically when I work it out if I surrender now (subtracting the £52 a month I am paying into it at the moment) I would get back what I paid in. In terms of performance this policy has been a disaster - it's one where Britannic didn't pay bonuses at all for a few years and at one point was worth a lot less than I had put into it.

Two questions:
Should I surrender now and reinvest the money elsewhere, such as my ISA or should I leave it where it is?

Am I right in thinking that it would be highly unlikely anyone would be interested in trading this endowment (Britannic say this is an option for this policy) given that it has just over a year to go?

Any advice much appreciated!

ReportInvestor

Sorry to be the bearer of bad tidings, M_S.

No-one would trade such a small, ten year policy which has no expectation of a terminal bonus.

Did you take it out with Britannic originally, or did Britannic take over the company you got it from?

What were the investment returns needed for £6,200? 4%? It sounds like it is best left alone as you are looking at a fair return for the last year (compared to current surrender value of £5K).

£5K + 12months premiums + 5% growth = approx £5900.

Mean_Scot

Thanks ReportInvestor.

Much as I suspected - didn't think the policy could be traded but thought I should check.

The policy has always been with Britannic - it says on my illustration that if investments grow at 3% a year I would get back £6,200 but it does says figures not guaranteed and could be less than this. If I thought it would be a guaranteed £6,200 minimum I would be happy to leave it where it is. Any idea how Britannic is performing at the moment?

My dilemma is whether to take it out, pay off a credit card bill of £800 so I have cleared all credit card debts and stick the rest in ISA/Savings etc.

ReportInvestor

Right. So it sounds as if no growth in the fund would still give you a return of about 5% on around £5.6K.

I would first check with Britannic that the £5.9K figure is the minimum they would pay out assuming no fund growth, or whether there are circumstances where you could get less e.g. a stock market or bond market slump.

If Britannic can grow the fund 3% then you are looking at a tax free 10% return on £5,600 this year - not bad.

It's always a close call when you have to pay off debts, but if that £5,900 is somehow guaranteed I would personally stick with the policy.

Mean_Scot

Hi again ReportInvestor,

That makes good sense to me! I have made a note of your advice and will see what Britannic say.

Thanks again.

ReportInvestor

The £5.9K may or may not be guaranteed but anything you switch to is not.

Britannic are trying to do the best thing for their long term policy holders [that's you if you hold on]. One way they are achieving this is by screwing anyone who cashes in early .

That explains why you may possibly have a useful tax free, guaranteed return over the next 12 months (as opposed to the previous 9 years .)

I'd be most grateful if you could post Britannic's reply to your next query as it helps in future replies to questions on MSE to others in your position.

ReportInvestor

Mean_Scot wrote:

Hi again ReportInvestor,I have made a note of your advice.

There is no such thing as financial advice on MSE. Please be aware of that when phrasing any future thanks.

Mean_Scot

ReportInvestor wrote:

There is no such thing as financial advice on MSE. Please be aware of that when phrasing any future thanks.

Oops, sorry ReportInvestor!

I will post what Britannic say when I question them further.

Mean_Scot

Hi again,

Just to let you know that I called the Britannic to query their maturity projections for the policy. They told me that they couldn't guarantee an amount, couldn't tell me the minimum I would get and couldn't tell me if any end of policy bonus would be added to the policy. However, they did say that bonuses had not been added over the past couple of years.

So in terms of getting more info out of them, not much at all. I guess I now have to weigh up whether I can personally afford to wait until the policy matures or whether I need to use the money now.

Just thought others who come across this situation might like to know what Britannic said.

I did ask if I would at least get back what I paid in and they couldn't tell me that either, "depends how it performs etc".

dunstonh

Britannic would give that information to an IFA if they asked for it.

Britannic do not have an advice channel and therefore cannot give advice or opinion on anything. They can only give factual information. So, when you ask a question that could be considered as advice or opinion, they will tell you that they do not know. Many insurers in the same boat would refer you to an IFA who can give that information to you after the IFA has requested it from the company. The liability then lies with the IFA and not Britannic.

ReportInvestor

dunstonh wrote:

Britannic would give that information to an IFA if they asked for it.

Although dh gives the reasoning behind this, which is no fault of IFAs, this revelation makes me so :mad: :mad: :mad: :mad: :mad: :mad: :mad: .

How is the financial services industry going to regain confidence when it keeps essential information from investors?