urgent advice needed

gozomark

jem16 wrote: »

I didn't really mean keep it forever or even the whole of the 10 years. I meant keep it until it recovers so that you don't make a loss.

one of the worst rules in investing is saying "I won't sell till I get my money back". Deciding when to sell should depend on what you expect to happen in the future, not on the original purchase price.

donnalove

jem16 wrote: »

Do you know from the paperwork exactly how much was initially invested into the bond?

yes £100,000 was the original investment

we have found some more paperwork with question marks over them and wrighting from my dad it looks like he was questioning this himself but obviously as he didn't tell us we don't know so we need to find out more.
We have a feeling it is as we first thought and he thought the 5% he was getting was from interest.

With him now gone we are hoping along with information we have and this paper work with his handwrighting on we have enough information.

thanks for all your comments.

medders2604

One other reason the advisor may have suggested and investment bond is that it would be outside his estate for care home fees assessment. The income would be taken into account but not the capital.
This assumes he didn't have any care needs when the policy was taken out though.

jem16

donnalove wrote: »

yes £100,000 was the original investment

Then your dad didn't pay the £7200 as the whole £100k was invested.

we have found some more paperwork with question marks over them and wrighting from my dad it looks like he was questioning this himself but obviously as he didn't tell us we don't know so we need to find out more.
We have a feeling it is as we first thought and he thought the 5% he was getting was from interest.

The problem is that he didn't question it with the bank.

With him now gone we are hoping along with information we have and this paper work with his handwrighting on we have enough information.

What reason is given for recommending the bond? Was he recommended to use an ISA first?

You say he was a taxpayer - was his income close to the age related allowance of £22,900? If so it could have been advantageous to have tax-free income.

medders2604 wrote: »

One other reason the advisor may have suggested and investment bond is that it would be outside his estate for care home fees assessment. The income would be taken into account but not the capital.
This assumes he didn't have any care needs when the policy was taken out though.

Yes that is one option. However it would need to have been documented as some other reason.

donnalove

medders2604 wrote: »

One other reason the advisor may have suggested and investment bond is that it would be outside his estate for care home fees assessment. The income would be taken into account but not the capital.
This assumes he didn't have any care needs when the policy was taken out though.

No he didn't have any care needs and yes that was a big concern after seeing what happenned to our auntie and how much she had to pay for her care, or should i just say bed and breakfast as the care she needed she didn't get :mad: anyway thats a different story. our main concern is obviously our dads investment.


Also the idea of keeping the bond till investments rise( not sure if we could) im not keen on plus in my dads will there is an amount intended for our mother who left him 12 years ago but as he kept the house( was in his name only) in which he sold eventually he has left her half the value of that less fee's. So we might not have a choice in keeping the investment.

his yearly income was no-where near the 22,000 but with all 3 pensions and state pension he was paying tax shouldn't he have been??

jem16

donnalove wrote: »

his yearly income was no-where near the 22,000 but with all 3 pensions and state pension he was paying tax shouldn't he have been??

With 3 pensions plus his state pension he would probably have income over £10k which would mean he was a taxpayer.

The £22,900 I mentioned is the age related allowance where you lose part of the extar personal allowance for over 65s. Eventually all the extra allowance would be lost and you would be back to the basic allowance which would mean a higher tax bill. This could have been one of the reasons for the bond being used.

Good luck with whatever you choose to do and sorry for your loss.

turbobob

Was this a With Profits bond or some other type of investment bond. What you said about the variable amount charged each month suggests it was an MVR (market value reduction) being applied to the withdrawals.

jem16

turbobob wrote: »

Was this a With Profits bond or some other type of investment bond.

It looks like it's the Legal and General Portfolio Bond.

http://www.alliance-leicester.co.uk/investments/index.aspx

jem16

donnalove wrote: »

Also the idea of keeping the bond till investments rise( not sure if we could) im not keen

Looking at the literature for the L&G bond it doesn't look like you can keep it anyway.

turbobob

jem16 wrote: »

Looking at the literature for the L&G bond it doesn't look like you can keep it anyway.

Yes I was wondering about that. I was wondering if there was just him as the life assured on the policy or if someone else had been named on it. If it was set up with just your dad as the life assured, then AFAIK there'd be no opportunity to keep it going as it would pay out the death value (101% of unit value?). There would also also be no early surrender penalty and if with profits, no MVR as they are not deducted from death claims.

If it had another life assured on it who is still alive, then cashing it in now would be classed as a surrender and therefore an early surrender penalty would apply (quite a heavy one in first year or two) as well as any MVR if with profits.