Life Insurance

[apd]

Hi,

A life insurance policy with a savings element was taken out in 1994 by a single parent with young children.

the premium was 25 punt per month, increasing by 5% each year. To date that would be about 6700 euro paid.

The current encashment value is quoted at 5000 euro.

given that the stock markets have gone up anywhere from multiples of 5 to 10 does this seem correct to anyone.

obviously in all depends on the percentage of each premium that was invested.

 

[ClubMan]

Depends on the charges that applied. Can you clarify these - e.g. initial contributions taken in charges (if any - in the past up to two years of contributions could be eaten in charges!), percentage of each contribution deducted in charges, bid/offer spread, ongoing annual charges etc.

Probably also depends on what portion of each contribution went on insurance and what portion went into the investment.

Also depends on what the money was invested in.

In short - impossible to comment without more details.

 

[RS2K]

Not good.

1/. Cancel indexation. Stops new initial commission being paid out.

2/. Consider life cover provided. Maybe term cover might be better and the savings element maximised?

3/. Look at fund switch?

4/. Leave alone to recover loss or encash.

It's one for professional advice.

 

[PM1234]

It depends on the amount of cover that was taken out. Also some of these policies have additional benefits attached. The premium may be higher depending on the age the policy was taken out, health history, smoker/non smoker etc.

As it is dependent on so many factors it really is difficult to say whether the savings element is value. Your friend should have received projections as to what the policy value was estimated to be worth in twelve years etc and could also request a premium breakdown so she knows how much goes into savings and how much is used to pay the life cover.

This really is the only way to determine how the policy is performing.

 

[Ravima]

you state single parent with young children ,not child.

this is important and the main focus of cover should be life assurance and not the investment element, to provide funds to look after children in the unfortunate death of parent.

I think you need to discuss with a broker to decide which is the best policy for you. I know very little about life assurance industry, but in the circumstances, I do not think that the savings element is in any way important and you need to pick the best policy to suit the particular circumstances.