Phoenix Covermaster

sjgbtap

Hi - can anyone offer any advice on what do with an Abbey Life Covermaster policy and an Abbey Life Covermaster (LRP)  policy (now run by Phoenix) taken out in 1982 and 1992 which are now worth 50% of what's been paid in over the last 30 and 40 years when one of them dies - or even less than that if cashed in early. Both my parents are named on the policies and it was in a recent cost-cutting exercise that I realised they are paying out £300 p/m to Phoenix for these policies! Any advice much appreciated.
thanks

dunstonh

What sort of advice are you after?   
You have posted in the missale section, but there is nothing in the post that indicates missale (putting aside that is it long before regulation started as well).

Why did your parents take these out?
Does that financial need still exist?

sjgbtap

They took them out so that if one of them died the family would be financially ok. I suppose I'm just shocked that a company that is worth billions can have turned £120k into £60k over that period of time. 

dunstonh

sjgbtap said:

They took them out so that if one of them died the family would be financially ok. I suppose I'm just shocked that a company that is worth billions can have turned £120k into £60k over that period of time. 

These are not investment accounts.   They are life assurance plans with an investment element.    In the early years, some of the monthly premium goes into the investment pot, some towards life assurance.  In the later years,  the investment pot starts paying for some of the life assurance (life assurance being more expensive as you get older).

Also, are you really sure they have paid £300pm since commencement?   £300pm in 1982 was a heck of a lot of money.  The average annual wage was £6552 a year.  £300 in 1982 money is about £1200 today.

Normally with these plans, from about year 15 onwards, they have a 5-year review point, and if they are off track, then the premium gets increased, or the sum assured reduced (policyholder decides which).   I would have thought it more likely that the premium started with a very small amount, and then each 5 years it got increased a bit.

Nearlyold

"Covermaster" was a whole of life flexible unit linked life assurance policy. The minimum premium would have been circa £15 - £20 per month. As dunstonh points out - £300 pm in 1982/1992 would have been an astonishing premium to have committed to at the time (unless perhaps you were one of Peter Rosengard's high net worth city slicker clients).

Given their current circumstances do they still need any of the cover?

sjgbtap

They are paying £300 now - no idea what they were paying back then but definitely not that  - they are  not high net worth clients! They have paid £120k in total across both policies.
Thanks for your explanation! Do you know what LRP stands for?
thx

Nearlyold

sjgbtap said:

They are paying £300 now - no idea what they were paying back then but definitely not that  - they are  not high net worth clients! They have paid £120k in total across both policies.
Thanks for your explanation! Do you know what LRP stands for?
thx

Probably just some abbreviated coding that's come though when Abbey Life's databases were migrated to Phoenix, most of the policies/features were abbreviated to initials on Abbey's systems, perhaps means something like Level Regular Premium as opposed to say single premium or escalating premium. Covermaster could be level or escalating from a lower minimum over the first 5 years (not to be confused with an increased premium due to a review)