Deposit lump sum before 65, 200% paid out on death

Stuart_W

I have just realised that my credit union offer a free life insurance type of cover on savings accounts. For any money saved and held in a credit union account before someone's 65th birthday, it is doubled upon death of the person and paid to their nominated beneficiary.

So, put in £1,000 before your 65th birthday, and a relative gets £2000 on your death.

This board has established that Michael Parkinson's Over50 plan is pretty much theft, unless you can predict your death is between 2 and 5 years away. There are also varying views on funeral plans.

This seems like an option I hadn't thought about. You'd need the equivalent of 5% after tax for almost 15 years for an equivalent return.

Does this seem worthwhile?

datostar

I think you might find that the doubling of savings payment does not apply after age 65, regardless of when you put the money in. That's certainly my understanding as a Credit Union member.

NAR

Datostar, have you read the link in post #1?

moonrakerz

I must confess to being somewhat mystified by the proliferation of these types of insurances/policies or whatever. People must buy them otherwise they wouldn't be advertised so heavily.

When I die everything I own will go to those nominated in my will (or the tax man !). If I am in debt, no one else is responsible for my debts.

Why on earth should I worry about "leaving something" for others ?

John_Pierpoint

Can you "write them in trust"?
So that the payout does not belong to your estate?
It is a way of saving up money and giving that money to the beneficiaries, that they can use to pay your debts/IHT when your estate is still tied up in bureaucracy.

dzug1

datostar wrote: »

I think you might find that the doubling of savings payment does not apply after age 65, regardless of when you put the money in. That's certainly my understanding as a Credit Union member.

But there are many credit unions - they may not all operate in precisely the same way

datostar

dzug1 wrote: »

But there are many credit unions - they may not all operate in precisely the same way

You're quite right and I'm afraid I didn't check the OP's link. Mea Culpa. My Credit Union stops insurance cover completely at age 65 but lends at 8% APR instead of the 26.8% quoted by the OP's. Swings and roundabouts, as usual, but that insurance cover does sound good.

datostar

John_Pierpoint wrote: »

Can you "write them in trust"?
So that the payout does not belong to your estate?
It is a way of saving up money and giving that money to the beneficiaries, that they can use to pay your debts/IHT when your estate is still tied up in bureaucracy.

I'll have to be careful here about differing rules within Credit Unions, but I think ABCUL allows nominations of funds up to £5000 for direct payment to a named beneficiary with any funds over that going to the estate. Helpful for immediate needs but probably not a viable vehicle for comprehensive estate planning.

pauletruth

some use them as family members never bothered insuring themselves. we could be faced with 6-8k in costs so that why we use them. i don't mind losing out on these policies as it means someone has not died. yes there is much better ways of covering the costs it just works for us. i like the idea of the free insurance may see if ours does it.

Stuart_W

John_Pierpoint wrote: »

Can you "write them in trust"?
So that the payout does not belong to your estate?
It is a way of saving up money and giving that money to the beneficiaries, that they can use to pay your debts/IHT when your estate is still tied up in bureaucracy.

The payout does not go to the estate - the application form contains a form of nomination where the beneficiary can be stated.

John_Pierpoint

I very much doubt that a "nomination" would put your wealth in the credit union account, outside the valuation of your estate?
It might well allow the person nominated access to the funds, as would a joint account at an ordinary bank.