Prudential/ScotAM Paid up & non qualifying?

steve01ruislip

Spoken with Pru customer services as 1st low cost endowment due to pay out this month - £1k short on £25k and the original projection was for possible £4k surplus plus possible terminal bonus of £22k :eek:
- but I grew to appreciate the risk given Martin's work highlighting the problem from 1990s so have made other arrangements.

So question - I have a second policy for £75k death cover which will pay £52k(if made paid up) Dec 2013. The premiums of £4k to Dec 13 will just hold value at 4% £56k - not worth doing in my view as I do not need the amount for mortgage repayment. Advice from Pru customer services is that if I make the policy paid up I loose life cover - yes I expected that - also the policy is likely to not be qualifying so could have tax implication. The HMRC site says time served is .75 of term or 10 years so I question Pru again but same answer. Are they being cautious or misleading? Can the Pru decide to make a policy not qualifying because it's made paid up when there is 3.5 years to maturity & can the Pru make the maturity a chargeable event?
The Pru advice seems to contradict the HMRC website so I am confused of Ruislip. Would appreciate some advice if anyone knows what insurance companies can do in these cases.
Thanks

dunstonh

I got a list of projections on Pru endowments yesterday and all showed they grew in excess of 8% net over the last year. Not enough to put most back on track but getting there again.

Are they being cautious or misleading?

Pru do not do the calculations as they do not carry the liability for getting it wrong. They just supply information and let you work out it. That isnt them being difficult, its because they dont hold the authorisations and things like this can fall under advice authorisation.

As long as the plan has done at least 10 years then it will qualify. You can ignore the other methods as that 10 year one is the easiest to follow.

Would appreciate some advice

Nothing posted on these forums that involves regulated activities is advice. Just comment and discussion only. You act on comments posted here at your own risk.

steve01ruislip

Thanks for the comment - not advice:T.
Guessed the 10 years was key but still don't understand why the pru customer services would say change will "probably" make the policy non qualifying and could result in a tax implication at maturity. This is misleading on the part of Prudential - it's not advice on value - either the policy is qualifying or is not and they can see the policy is over 10 years old. Funny way to run a business

Did the data you saw from the Pru split out the ex Scottish Amicable policies? I've seen comments here that those policies are not doing as well as the Pru policies - well 4% shortfall now and in 3.5 more years the shortfall will be around 20%.
Thanks again for the post.

dunstonh

Guessed the 10 years was key but still don't understand why the pru customer services would say change will "probably" make the policy non qualifying and could result in a tax implication at maturity. This is misleading on the part of Prudential - it's not advice on value - either the policy is qualifying or is not and they can see the policy is over 10 years old. Funny way to run a business

you have to remember that the front line staff have supervisors listening in on calls randomly (and dont know if they are being listened in on) and they are told under no circumstances should you offer advice or opinion and you should keep matters vague unless its a policy fact. If in doubt, keep it vague and dont say for sure. Taxation is one of those areas that does usually fall under advice. You would expect them to make you aware of an issue that may apply but leave it to you to find out yourself or through your adviser. The other thing to remember is that many of the telephone staff are not well qualified and dont have a lot of knowledge. Many of the insurance call centres operate with a lot of temp staff on rolling contracts.

Did the data you saw from the Pru split out the ex Scottish Amicable policies? I've seen comments here that those policies are not doing as well as the Pru policies - well 4% shortfall now and in 3.5 more years the shortfall will be around 20%.

That list was a Scot Am list. Not an "original" Pru list. Scot Am plans do not tend to perform as well as Pru although they are still typically better than most of the others.

A rebound on projections was expected and unless there is another market crash, then there should be a similar improvement next year as the smoothing won't be fully factored in yet given the continuing volatility.

steve01ruislip

Well that makes sense from the Pru's point of view & has made me read HMRC documents & try to work out what the rules are.
Interesting on the former SA results - makes you think again where to save £4k
:cool: