Endowment Lapsed or Paid Up?

Slopalongplacidly

In 1988 my husband and I took out an endowment for £105,000 which covered two mortgages. Years went by and we moved, bought another property, separated - about ten years ago- and I ceased paying anything towards the £188 per month premium as my husband was paying nothing towards the children's maintenance and I couldn't afford it.

I am now trying to resolve my financial affairs with or without husband's cooperation. In older correspondence from his solicitors I was told that the Alba Life (now Pheonix) policy was paid up and worth £22,268. More recent correspondence from his solicitor states that the policy has a surrender value of £22,268 - and has lapsed. His solicitors have all the paperwork relating to this policy, and I have not had any correspondence from Alba or Pheonix. I have just phoned their call centre who say that the policy is lapsed but they are unable to let me know the surrender value except in writing once the back office have looked at it.

It seems extremely unlikely to me that the value would be the same on a lapsed policy over the course of eight years or so, bearing in mind that some sort of cover is still in place, am I right?

I am trying to get all the facts together to take to an IFA as quite honestly the advice I have had from the solicitors over the past ten years has been very vague, and I feel I really need to take control. Does anyone have any idea what might be going on here?

dunstonh

I am trying to get all the facts together to take to an IFA as quite honestly the advice I have had from the solicitors over the past ten years has been very vague, and I feel I really need to take control. Does anyone have any idea what might be going on here?

The information you have been given is misleading.

When a policy lapses, it means it does it with no value. The phrase in full is "lapsed without value". Lapsed is the short term for that.

Paid up is when the value is retained (subject to investment returns) but no contribution is being paid into it.

Surrendered is when the policy has ceased and any value has been paid out. An endowment policy cannot really lapse unless its in the first couple of years when it hasnt obtained a surrender value yet. Yours had been around 10 years so it would have a value.

Phoenix bought up a load of virtually dead insurers over the years. They are not known for paying much, if anything in bonuses. However, you wouldnt expect the value to remain the same after that long a period. It may not have moved much but it would have moved.

Slopalongplacidly

Thanks for responding. I am wondering whether the solicitor is quoting the value at the date of separation 10 years ago, and he states the only way to deal with this policy would seem to be to surrender it. As it will mature in 2013, would it still have some sort of terminal bonus? The Pheonix call centre operative was emphatic that it was a lapsed policy but when I quizzed him he said it would have a surrender value and I would be able to sell elsewhere. The policy has operated under four or five different names since we took it out, so there is plenty of room for confusion along the way.

As you are an IFA can you tell me what specific information I need to take to my local one in order to get the best advice? Would you advise people separating and divorcing to get independent financial advice rather than rely on their solicitors?

dunstonh

I am wondering whether the solicitor is quoting the value at the date of separation 10 years ago

There is certainly logic in that.

As it will mature in 2013, would it still have some sort of terminal bonus?

Terminal bonuses accrue or are removed as you go along. Alba Life isnt one you would expect much on.

The Pheonix call centre operative was emphatic that it was a lapsed policy but when I quizzed him he said it would have a surrender value and I would be able to sell elsewhere.

Many of these call centres for insurers employ short term contract staff on 3 month contracts. You usually have to tell them how to do their job.

As you are an IFA can you tell me what specific information I need to take to my local one in order to get the best advice? Would you advise people separating and divorcing to get independent financial advice rather than rely on their solicitors?

The new IFA can take an authority from you to allow them to access information on the plan. So have the details handy.

Most solicitors cannot give financial advice and are not authorised to do so. Many did in the old days pre regulation and sometimes a few they still think they know what they are doing. A little bit of knowledge can be a dangerous thing. It would be a bit like asking an IFA for legal advice!