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Help understanding L&G Flexible Mortgage ISA and Life Insurance
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sliver
Posts: 341 Forumite


Hi
I have come to realise I am a bit befuddled about a Flexible Mortgage ISA I have. The policy was with Legal and General and obviously consists of an ISA for an investment aspect. It also has an element of life cover recently taken over by Reassure.
Although I don't have the exact details to hand, L&G have been writing to me for a while advising my policy probably wont meet the original value it was aimed at. This is fine as I paid the mortgage off and simply kept the policy running. What has confused me is I have contacted Reassure to enquire about a surrender value and they have advised me that the surrender value is quite high. It consists of 2 policies with a sum assured of around £33k each, The surrender values are £22k and £29k respectively, with one maturing in 2023 and one in 2024.
If the ISA is going to come up short, why wouldn't I simply surrender the policies? I'm sure I am over simplifying this and I admit to not fully understanding how the ISA element and the Life assurance element work together and what happens to them both at the end of the term. Can someone help me understand what I have and what happens at maturity in laymans terms please? (yes I know this is a bit of dumb question!)
Thanks in advance
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Comments
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Although I don't have the exact details to hand, L&G have been writing to me for a while advising my policy probably wont meet the original value it was aimed at.Projections use assumptions. If the assumptions are low, the projected final value will be low. if it is lower than the original mortgage balance, then it will be reported as a possible shortfall. Assumptions tend to be pessimistic. This is noticed by those that held onto their endowment policies and have recently seen maturities exceed their target value. Despite getting years of projections saying they would could fall short.If the ISA is going to come up short, why wouldn't I simply surrender the policies?Is it going to come up short?What is the target growth rate to hit target? Usually the figure is higher than the projection rate. e.g. if the target growth rate is say 5% p.a. to hit target and the projections are using say 3% then it would project a shortfall. However, the actual returns could be equating to 7% p.a.Can someone help me understand what I have and what happens at maturity in laymans terms please?You can either cash it in or transfer it to another ISA (which you can do now as there is no surrender penalty on these usually). Whatever the value is on the day is the value you will get.
I am an Independent Financial Adviser (IFA). The comments I make are just my opinion and are for discussion purposes only. They are not financial advice and you should not treat them as such. If you feel an area discussed may be relevant to you, then please seek advice from an Independent Financial Adviser local to you.1 -
Thank you ,I'll get the projection details and reply over the weekend. I think I have somehow separated the life cover aspect and the ISA aspect and confused my self that they are two things, when in fact it's just one thing. I was happily waiting for maturity but a divorce now means I need to look as assets more closely. I was further confused by the separating out of the policy from L&G to Fidelity and Reassure as separate providers
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I think I have somehow separated the life cover aspect and the ISA aspect and confused my self that they are two things, when in fact it's just one thing.They are actually two things bolted together in one marketing package.
I am an Independent Financial Adviser (IFA). The comments I make are just my opinion and are for discussion purposes only. They are not financial advice and you should not treat them as such. If you feel an area discussed may be relevant to you, then please seek advice from an Independent Financial Adviser local to you.0
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