E
esquilax
Guest
My father has got a letter from Bank of Ireland Life regarding a "Lifetime Protection Plan" which was taken out in 1995 as a requirement of a loan with the bank.
I thought this policy was a product that pays off any outstanding balance should the insured party die during the lifetime of the loan, i.e. you pay a monthly premium that is proportional to the outstanding balance on the loan. At the end of the loan, you stop paying the premium. The same idea as that payment protection insurance credit card companies try to sell, only hopefully better value.
I don't know if the above type of product exists but it seems what he's actually got instead is some kind of life assurance policy incorporating a (poorly-performing) investment element to it.
The letter states a "current value" for the policy of €1600, while the total premiums paid to date are €6800. It gives the "benefit value" of €45000, the original loan value.
The letter goes on:
My questions are:
1) How does one relate this "current value" of the fund to the amount of cover provided? Surely if he dies, the policy pays out the "benefit value", no more or less. How do BOI determine whether the value of the policy is adequate to provide the cover or not?
2) Does the cessation of cover scenario they mention mean that both parties walk away owing each other nothing, or does the policy have a cash redemption value?
2) Is there any way of telling whether this policy is good or bad value in relative to other products on the market? If he has no general need for a life assurance policy, is there any reason to continue paying into this once the loan is repaid to the BOI?
Thanks in advance for any advice.
I thought this policy was a product that pays off any outstanding balance should the insured party die during the lifetime of the loan, i.e. you pay a monthly premium that is proportional to the outstanding balance on the loan. At the end of the loan, you stop paying the premium. The same idea as that payment protection insurance credit card companies try to sell, only hopefully better value.
I don't know if the above type of product exists but it seems what he's actually got instead is some kind of life assurance policy incorporating a (poorly-performing) investment element to it.
The letter states a "current value" for the policy of €1600, while the total premiums paid to date are €6800. It gives the "benefit value" of €45000, the original loan value.
The letter goes on:
and further down:
It gives two proposals for increasing premiums (one roughly doubling the premium, one roughly tripling it) and projections of what increases in value this will yield x years into the future.
My questions are:
1) How does one relate this "current value" of the fund to the amount of cover provided? Surely if he dies, the policy pays out the "benefit value", no more or less. How do BOI determine whether the value of the policy is adequate to provide the cover or not?
2) Does the cessation of cover scenario they mention mean that both parties walk away owing each other nothing, or does the policy have a cash redemption value?
2) Is there any way of telling whether this policy is good or bad value in relative to other products on the market? If he has no general need for a life assurance policy, is there any reason to continue paying into this once the loan is repaid to the BOI?
Thanks in advance for any advice.