Canada Life Concordia Investment Policy

D

DaveD

Registered User
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I've had my head stuck in the sand about a 25 year Canada Life Concordia Investment Policy I took out in 2000 and I've resolved to educate myself about what I'm paying into and determine if I should continue to do so.

  1. I pay €64.10 per month into the policy and have done so since June 2000, an approximate total of €10,500.
  2. Current surrender value is €8,600.
  3. The policy includes life cover of €18,000
  4. Annual "bonuses" are added to the policy every June, these are decreasing every year.
  5. A terminal bonus is payable in 2025 - the value of which is unknown but an estimate is being sent by Irish Life who now manage Canada Life business.
  6. I can cease payments to the policy but not cash it in and leave the current funds there until maturity. Life cover will cease with this option but it will still receive the terminal bonus, if there is one.

Has anyone any information about the value of this policy? Is it good, bad, or middling. Should I cash it in, continue paying, or stop paying and leave it run to maturity?
 
So, 4 years later an update.....

I did nothing, Irish Life kept sending annual updates with the current value of my "investment" which always lagged a bit behind the value of total contributions. Last year they sent a separate letter saying that if I was thinking of cashing in the policy I should a while as they were changing the way in which the Terminal Bonus was to be distributed and that this would be advantageous to me. Again, I did nothing. In April 2017 the surrender value was about €11,800, I had paid in about €13,000. This years letter has just arrived with the 2018 surrender figure of €19,070, which states that it now includes a "partial Terminal Bonus" of approx €6,000, contributions so far are about €13,800. So after 18 years of paying €64.10 per month the policy is worth approx 37% more than I've paid in, I think!

I've no idea if the same level of "partial terminal bonus" will be paid next year or any other year. Anybody any thoughts on the matter? Previous history on part part suggests that I'm happy to do nothing and wait.
 
Hi Dave

Don't forget that as well as the 37% return, you have also had life cover.

It's very difficult to assess these policies. They sometimes reward those who hold on for the full 25 years, so they are ok value for them and terrible value for those who cash in early.

It also depends on your financial circumstances generally. If you have a mortgage with an interest rate of 4.5%, you might be better off cashing it and reducing your mortgage. Or you might be better off contributing to a pension scheme.

You should pay a fee to a financial advisor to assess this policy's fees for you.

Brendan
 
Cheers Brendan, forgot about the life cover but its only about €15k at the moment, but cover of €400k through employer. Mortgage is a tracker on ECB +0.6% so very little point in paying extra into that, pension is maxed out already (defined benefit) - this policy is an extra to that as I hope to "retire" from my current job in 8 years and change to something else, but that won't pay a lot. The policy fees are on the annual statement and from memory are about 1% of annual contributions per annum, so last year about €7 on approx €700 contributions.

These policies are indeed very difficult to assess, even Irish Life don't seem to have much info on it, or I haven't asked the right questions. At the moment it would appear that sitting back and doing nothing is working, but I'm always very suspicious so I'll seek advice from a paid financial advisor as you suggest. Or I could do nothing ;-)
 
DaveD said:
The policy fees are on the annual statement and from memory are about 1% of annual contributions per annum, so last year about €7 on approx €700 contributions.
Click to expand...

Hi Dave

You are probably also charged a fee on the fund value.

So I would say you are being charged 1% of €19,000 or €190 per year.

But it could be a lot higher.

Brendan
 
This policy may well have a hidden charge for the life cover. Many policies of this type deduct units (at a variable rate) each month from your investment to pay for the life cover. Ask Irish Life to send you the following information: -

  • Details of all fees and charges, including policy fees, allocation rates, bid/offer spreads, cost of life cover for the past three months, initial units, accumulation units.
  • Ask them to send you details of what fund(s) you're invested in.
  • Ask them to detail any penalties for stopping or bonuses for continuing. Tell them that you accept that future bonuses may or may not be guaranteed, but you'd like to hear what the current bonus payable is for a policy of this type.
The answers you get back might be in gobbledygook, but post them up here and The Askaboutmoney translation team will get to work.
 
Brendan Burgess said:
Hi Dave

You are probably also charged a fee on the fund value.

So I would say you are being charged 1% of €19,000 or €190 per year.

But it could be a lot higher.

Brendan
Click to expand...

Thanks Brendan, sorry, the €7 might actually be the Government stamp duty on contributions, I don't have the documentation in front of me at the moment. I'll follow up later with a more accurate answer!


Thanks LDFerguson, thats very helpful, not sure what some of it means but I shall ask as above and see what I get back. Seems strange to me that the value of the plan has increased so much in the last year, I find it hard to believe that this will be a regular occurance!

Thank you both for taking the time to offer advice, its very much appreciated.
 
DaveD said:
Thanks Brendan, sorry, the €7 might actually be the Government stamp duty on contributions, I don't have the documentation in front of me at the moment. I'll follow up later with a more accurate answer!
Click to expand...

The Government levy is 1% so if you're paying around €700 per year this sounds about right.
 
Hi Dave d,

How is that plan doing now. Similar to you I stated in 1998 and it matures in 2029. I have kept a half eye on it over the years but its getting interesting now. By all accounts it is supposed to rise considerably in the last few years. How are you now?
 
A well timed follow-up!

My plan is due to mature in June this year so the answer to the mysteries above will hopefully materialise then.

I did enquire last October with the financial services company that took over the original agents and they were next to useless in anything they could offer. They just quoted back to me what I told them and offered to follow up with Irish Life. Easier for me to do this, Irish Life were much better (sort of), they send me a scanned copy of the original agreement, dozens of pages along with several from someone else's agreement, hopefully not yours. Not great from a GDPR perspective. I think there is an option to take the maturity value as a lump sum or a monthly instalment payment for a defined number of years, but this was a bit vague in the documentation.

As of April '24 the surrender value of the plan was €44k with contributions of about €18.5k over 24 years. Surrender value in April '23 was €35.5k, so an increase of €8.5k in the year to April '24. I did work out what the compounded interest rate over the 24 years would have to be to match that but I've forgotten now, but it wasn't particularly high, maybe about 7%.

Are your annual statements showing similar?
 
DaveD said:
I did work out what the compounded interest rate over the 24 years would have to be to match that but I've forgotten now, but it wasn't particularly high, maybe about 7%.
Click to expand...

If you'd saved €60pm in a with-profit savings plan with Standard Life over the last 25 years you'd have received 3.07% pa (page 2)

I reckon you'd have strugged to get to 7% pa with global index tracker when you factor in all charges/costs/taxes over that period.


Gerard

www.saveandinvest.ie
 
Thanks Gerard, I should get some updated figures in April but lets see what actually arrives in June!
 
DaveD said:
I did work out what the compounded interest rate over the 24 years would have to be to match that but I've forgotten now, but it wasn't particularly high, maybe about 7%.

Yes. I calculate you had a monthly return of approx. 0.59% and an annualized return of approx. 7.32% to April 2024. The annualized return of the Eurostoxx50 index from June 2000 to April 2024 was approx. 6.1%. https://curvo.eu/backtest/en/market-index/euro-stoxx?currency=eur . So not bad.
 
It'll be interesting to see what the final amount turns out to be.

I'm usually reasonably on top of finances but this has been an ongoing mystery for 25 years, trying to find out anything useful about the plan has proven to be frustrating to say the least. Irish Life send annual statements with values that appear to be going in the right direction and the €64 per month is small enough that it's not very relevant to the bigger picture. But I am slightly ashamed that I don't know 100% what this Concordia plan really involves!
 
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