Life Assurance

mudgekin

Hope someone can advise and not shoot us down in flames for our stupidity

20 years ago we had gone to a financial advisor and arranged amongst other things a pension for DH, an endowment mortgage and 2 life assurance policies. The company no longer exists having gone into administration and the owner barred form being a company director for some years.

The discussions that we had were that since we have no dependants it would be good to have life cover until we retired when if we couldnt afford it we could always cash it in and look for something less expensive.

The policies were transferred from pillar to post and ultimately came to rest with friends life. On looking through paperwork we came across a statement from last year which said that there was no maturity date on this. Now I am not sure if previous statements said the same, or in fact we had any as we seemed to change companies regularly to the extent I no longer remember who were the first that we bought it with. Last one was winterthur who then became friends Life.

The documents show that there is 14k in each with profits and due to ill health we will need to retire considerably early next year. The £100 pm that we are paying will be hard to find, if even possible and FL have told us tough, this isn't a term policy but a whole of life.

Can we even argue this or do we just throw away 20 years of 100 pm?

many thanks

dunstonh

Can we even argue this or do we just throw away 20 years of 100 pm?

Life assurance is like car or household insurance. You pay each month and if you die, it pays out. If you don't die then it doesnt pay out. However, you are still alive and should be thankful of that.

Investment backed life assurances are not that common nowadays but used to the norm 20 years ago. They build up a fund value. Often not much but then that is not the purpose of the fund value. If you cancel/surrender the policy then the cover will stop and the surrender value would be paid out. If the surrender value is £14,000 (each) then that is what would be paid out.

mudgekin

Thanks so much for the reply. I really appreciate it. Because things will be extremely tight financially the £100pm will be better paid on food

I guess what I am asking is that since FL have told us too bad, this policy can't be surrendered that we don't have any argument against this and we loose what we paid totally. I know that to surrender there is always a penalty but they are telling is that this is whole of life..too bad

dunstonh

I guess what I am asking is that since FL have told us too bad, this policy can't be surrendered

There is normally no problem surrendering a policy as long as you accept the consequences (i.e. life assurance stopping)

I know that to surrender there is always a penalty but they are telling is that this is whole of life..too bad

That means it never matures. However, it does not mean you cannot surrender it.

mudgekin

Thanks dunstonh, especially understanding it with all of the dreadful typos I made. I guess we can then go back to FL again and try once again to get them to accept that we need to surrender the policies. The last lady I spoke to said that if we surrender we loose everything which we were appalled at not even getting some of the premiums back.

dunstonh

The last lady I spoke to said that if we surrender we loose everything which we were appalled at not even getting some of the premiums back.

Try and again. Take names of the people you speak to. Perhaps first ask them the surrender value of the policy. Surrender value is the value you get back if you surrender the policy. So, it cant be £14k on the one hand but zero on the other.

Good luck with it and keep us informed

mudgekin

As promised, an update

It gets stranger and stranger. It turns out that we both have a fixed term policy each which was supposed to have been cancelled when the whole of Life policies were bought and we have been paying them ever since..gah. Those finish in 2018. The background to those was that we ended up with term policies instead of whole of life and when we realised we went back to the financial adviser and said that was the wrong product. So much for cancelling.

With regards to the whole of life policies they have offered me just over 6k which really I am glad about. I can get a funeral plan and have spare cash to put away as a wee emergency fund. Thanks to dunstonh, without your advice I wouldn't have persevered.

I guess the moral is to make sure you understand what you have bought and when the documents come in try and understand the pages of gobbledygook

dunstonh

Thanks for the update. 6k is better than nothing but still less than you thought. Luckily, nowadays things are a lot clearer than they used to be. Even I struggle understanding some of these old policy documents that I come across and I have been doing this for 20 years.