I am losing money on a Life Policy with HSBC. Is there anything I can do?

mortonmorton

I took out a Lifetime Plan in 1991 (with Midland Bank in fact) which provided Guaranteed Life Cover of £20,000 to my estate when I died for a premium of £22.04 per month.  In 2005 they reduced the sum assured to £19,383 and in 2010 it plummeted to £13,294 and regular reductions followed.. I did increase the premium a couple of times currently the sum assured is £7564 for a premium of £38.81 reducing to £6968 on 23 November unless I increase the premium again.  
I understand that they have not done anything wrong but what makes me feel worse is that I have to date contributed £10,102 in premiums since 1991 for a payout of only £7564, and every month I am throwing another £38.81 down the drain.  I have asked for the premiums to stop and the sum assured to be frozen at £7564 for paying out when I die which seems fair to me, but apparently that is not possible.
If I cash the policy in now I shall get a Surrender Value of just over £1100 and my beneficiaries will lose out, but at least I won't have to give HSBC any more premiums.. As I have indicated earlier, I realise this is one of the risks involved in taking out Life policies, but  is there anything I could do to reduce my losses?

dunstonh

The type of plan you have is typically for someone who thinks they do not have particularly long to live.   Not as last resort as an over 50s plan but more typically someone in their 60s who thinks they may not get out of their 70s.

The outcome generally is that if you live longer you are a winner as you have had a longer life but you get less out of the life assurance plan.    However, if you die earlier, you lose on the length of life but your beneficiaries get more.

It is a judgement call that only time will tell which was best.   It is worth noting that the type of plan you have was largely obsolete by the mid 90s.   Whole of life assurance plans without any investment element were available by then (but not from a bank - it would have needed an IFA).

Basically, you now need to look at this from a needs point of view now.  Do you need it financially or not?