Phoenix Life NISA ‘Funeral Fund’?

Zebra76

I’m helping my 81yr old MIL to sort her paperwork- she’s showing signs of early dementia and seems a little confused about her finances (she has LPA set up ready when we feel it’s time).
I found an envelope marked ‘Funeral Fund’, it’s a Phoenix life ISA bonus account- NISA Unitised with profit. I can see she took it out in 2001 (poss Pearl/Britannic back then but I can’t find old paperwork) so has been paying in for 25 years. Current premium is £40pm.
The g’teed value is £5500, the payable on death sum £7000.
I don’t know how long she’s been paying £40pm, I assume premiums would have started much lower and increased over time but I can’t find paperwork. She has no idea other than it’s her ‘funeral fund’. But from what I can make out it’s just an ISA (various stocks & shares?) and had given her a pretty poor return!
Given that she is showing signs of dementia and we anticipate a move to a care home within the next couple of years I assume this investment would just be classed as a financial asset and could be used for care home fees? Would it be better to cash in and purchase a FDA approved funeral package instead? I am concerned she was mis-sold this in the first place but no way to prove it I guess?
Any advice would be appreciated. I’m trying to help both her (and us) while she still has capacity.

nottsphil

I hope it's not one of those plans where you have to maintain payments for the rest of your life to get the funeral money, however long you live. They should be banned IMHO.

As she still has capacity, you could get her to request some sort of statement as to the annual amounts that she has been paying.

masonic

The first question to get an answer to is can it be cashed in? The answer might be no, or yes but for a fraction of its current value.

The second question is can the premiums be stopped without adverse consequences?

It does sound like this would be considered part of your MIL's savings and investments and subject to a means test, but depending to the answers to the above, it may or may not be worthwhile doing anything with it now.

dunstonh

I found an envelope marked ‘Funeral Fund’, it’s a Phoenix life ISA bonus account- NISA Unitised with profit. I can see she took it out in 2001 (poss Pearl/Britannic back then but I can’t find old paperwork) so has been paying in for 25 years. Current premium is £40pm.

The ISA bonus account was an ex-Pearl Assurance product. It was originally an insurance ISA but is now classified as a stocks and shares ISA, although it invests in the Pearl with Profits Fund.

I don’t know how long she’s been paying £40pm, I assume premiums would have started much lower and increased over time but I can’t find paperwork.

That is an incorrect assumption. The plan did not have the facility for automatically increasing contributions.

But from what I can make out it’s just an ISA (various stocks & shares?) and had given her a pretty poor return!

I doubt it's given poor returns relative to its risk profile. Effectively, it was capital secure. You can't get back less than you pay in.

The g’teed value is £5500, the payable on death sum £7000.

That doesn't fit with someone paying £40 per month over 25 years unless there have been withdrawals in that period. So it is likely that withdrawals have been made.

I am concerned she was mis-sold this in the first place but no way to prove it I guess?

It's very hard to be mis-sold an ISA. Nothing you have said suggests she was. You have made some assumptions which are probably incorrect and it's that lack of knowledge that is leading you to think that.

It's likely that the Pearl agent decided that at her age, putting it into a very low-risk ISA was a better option than using their own Funeral plan (which would have been a Whole of Life policy). They were probably right.

nottsphil

OP you are fortunate to get comprehensive expert information from the sub-board's no.1, all within an hour of posting about an obscure product!

Zebra76

Thank you so much for this information- it makes it much clearer to me what product she originally started with and I now just need to clarify exactly how much she’s paid in over the 25 years compared to how much it’s worth now. As I said, we’re trying to work together with her to make sure the money is used for her funeral expenses and not swallowed up in care home fees- that’s her main wish (and understanding) of what this is for.
As you can tell I am not familiar with this kind of product, and have relied on Google/chat GPT to assist me so far, therefore the advice on here is invaluable

masonic

What she's paid in and potentially withdrawn in the past is not something you can do anything about, and it won't affect your decision to move it somewhere it could be ring-fenced according to her wishes to use it for funeral expenses rather than her care.

Keep_pedalling

https://forums.moneysavingexpert.com/discussion/comment/82106190#Comment_82106190

What she has here is an ISA so it is savings and needs to be included in any financial assessment for care costs it is not an insurance policy or pre paid funeral plan so forms part of her overall ssvings and estate.

Is she does need care that she needs to fund then even if it is long term care her estate will still have plenty in it to pay all funeral costs as once her savings fall to £23,500 she will only have to contribute from income plus deemed income from savings over £14,250. If her savings then fall to that lower level then the deemed income will no longer apply to her savings. So at worst she will still have that amount of money in her estate at the time of her death.

You can therefore assure her that her funeral costs are covered. You could also cash in some of the ISA and purchase a pre-paid funeral plan which would take cover the bulk of her funeral costs. This is then taken outside her savings. Purchasing a pre-paid funeral plan is not treated as deliberate deprivation of assets.

Zebra76

Thank you. Would it be better to cash it all in (approx £5500), get a pre-paid funeral setup at a cost of approx £3-3500 and put the rest in her current account, or just withdraw what is needed for the funeral expense and keep the account running? I have no idea what/if she may have withdrawn in the past- she doesn’t seem to know anything about it so I suspect her late husband may have dealt with it all before he passed away (2009).
Apologies for sounding clueless but i haven’t had to deal with anything like this before!

masonic

Personally, I would get rid as it would serve no purpose after you have a more appropriate plan in place. There are good savings accounts that could be used in the short term for the excess.