Advice please regarding Abbey Life Covermaster Scheme

madmalteaser

Hi all!

I'm actually leaving this message on behalf of my parents. Dad has an old Abbey Life Covermaster policy that he opened in 1987. At the time he was guaranteed a payout of £62k in the event of his death and was paying £12 per month. Over time, as things do, his monthly payments increased and he is now still paying £18 per month into the scheme. However, he has received a letter recently stating that the payout is now worth £11k and will be being reviewed next year with the likelihood of it's value dropping to £9k.

We've worked out an approximation of how much he's paid into the scheme thus far and I make it out to be a little over £6000. He is signed up to pay into this scheme until 2058 or until he dies, whichever comes sooner (death seems more likely until he really does live until 108!) and I suspect, by the time a payout is needed, the value of it would have dropped still further.

I'm of the mind he should opt out of the scheme now. I've told him to try and find out what the surrendering payment is and cut his losses. This seems like a lose/lose situation all round really. Abbey Life have advised Dad to seek financial advice but my parents life overseas so finding someone who understands UK finance schemes may prove difficult and I know no one will discuss it with me due to data protection and all that jazz. Which is why I'm posting here.

I would appreciate any thoughts or advice anyone can offer so that we can hopefully arrange the best outcome for my folks. They've had a real run of bad luck with money they've invested in various places so any help they can get right now would be grand.

Thanks!

[Deleted User]

Why not suggest to your dad he speaks with a UK based financial advisor?

dunstonh

We've worked out an approximation of how much he's paid into the scheme thus far and I make it out to be a little over £6000. He is signed up to pay into this scheme until 2058 or until he dies, whichever comes sooner (death seems more likely until he really does live until 108!) and I suspect, by the time a payout is needed, the value of it would have dropped still further.

These old whole of life plans often had an unrealistic age just to indicate they were whole of life.

I would appreciate any thoughts or advice anyone can offer so that we can hopefully arrange the best outcome for my folks. They've had a real run of bad luck with money they've invested in various places so any help they can get right now would be grand.

This is not an investment. It is a life assurance with an investment element. The investment is not their for gain purposes. its primary purpose is to pay out on death.

madmalteaser

I understand this isn't an investment - the point I was trying to make is that my parents haven't had much luck when it comes to anything financial over the years and this has depleted their savings drastically. What I want to know is, is it worth him still paying into this plan when the value of it has decreased so dramatically over the years. He's only in his 60's now, if he lives another 20 years, what will the value of it even be then, compared to how much more he'll have paid into it?

madmalteaser

Deleted_User wrote: »

Why not suggest to your dad he speaks with a UK based financial advisor?

This is something that we're considering. Dad is always reluctant to phone the UK though, he says because of phone bills and it's "a pain" - I suspect it comes down more to the fact that he hates speaking on the phone! I would call one for him but I know they probably won't speak to me directly so it defeats the object really.

[Deleted User]

Some of the very best financial advisors have email (obviously not those outside of London) - would this be an option?

dunstonh

Advice has a regulated meaning. An adviser requires a factfind and information before they can give advice. Also, the UK has gone fee based for advice since the end of 2012. So, it will cost him.

Nobody on this board can realistically suggest what he should do because we dont know enough to decide what is best. Plus, we dont know enough of the plan. Some of these plans, whilst whole of life, actually have a point where the insurer will cease to collect premiums but retain the life assurance and pay out on death, whenever that occurs. We know too little to really be of any help.

madmalteaser

Deleted_User wrote: »

Some of the very best financial advisors have email (obviously not those outside of London) - would this be an option?

Yes totally! I'll look into it, thank you!