Does it make sense to cancel life insurance policy ?

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Lorrie

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Hi any advice appreciated.
My parents had a joint life insurancy policy for years. In 2000 my mother cancelled it and cashed it in and took out a new policy in my dads name. She obviously thought she would outlive him. She didn't.
The direct debit is set up for almost 200 a month for his own life insurance policy. I don't think there is any point in him continuing to pay this as he could use the money better now when alive and the 3 of us won't be looking for it in the future? Does it make sense to cancel it?
 
Re: Life Insurance cancelled?

if he has no dependants, no mortgage , loans etc.. then yes I dont think he requires life assurance,
 
hi thanks for the advice. We sat down and discussed it with dad and he rang the insurance company. If he encashes it now its worth about 1200 euro. Whereas if he dies its worth 112,000 euro.
So my dad reckons to keep paying it! As its far too much money to lose to the insurance company after paying so much into it for years! he was laughing saying we should pay it! So we are going to split the cost between the three of us and keep it up. I suppose its good that we can discuss and have a laugh over such a serious topic.
 
Lorrie said:
If he encashes it now its worth about 1200 euro.
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Sounds like this is a policy with an element of savings built in as opposed to a pure life assurance policy?
Whereas if he dies its worth 112,000 euro.
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Is it a whole of life or a fixed term policy?

Don't keep the cover unless it's absolutely necessary. You could be better off investing the premiums in, say, an aggressive and low charges unit linked fund which is much more likely to yield returns even if he doesn't die!

Is he maximising his SSIA contributions? If not then the €200 a month might be better of going in that direction Is he retired? If not then €200 p.m. into a pension could be a good idea especially once tax/PRSI relief is factored in.
 
Hi Lorrie

If its a whole of life contract. The fact that theres an encashment value suggests so, the 200p/m will go up substantially after normally age 70 and will be reviewed each year after that. This can make the policy very expensive in the later years. If its term assurance the policy will have a specified end date and term and you can set the exact premium so it dosen't get reviewed.

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Hi - thank you for the replies. I'm afraid I don't have the actual Policy details with me.
What I have from a letter is that the Policy Type is a Protection Options Plan (in force) and commenced 1999 - the term is open ended and I apologise I was incorrect with the amount per month - its €126 inflating.
Current surrender value €1427.
And its for one life assured.
Don't know if this will give any indication as to what kind of policy it is. I can get policy details at lunch.
 
Lorrie said:
Hi - thank you for the replies. I'm afraid I don't have the actual Policy details with me.
What I have from a letter is that the Policy Type is a Protection Options Plan (in force) and commenced 1999 - the term is open ended and I apologise I was incorrect with the amount per month - its €126 inflating.
Current surrender value €1427.
And its for one life assured.
Don't know if this will give any indication as to what kind of policy it is. I can get policy details at lunch.
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If it has a surrender value then it is presumably some sort of dual life assurance/savings plan. You need to post more specific details and then decide whether or not this policy is suitable for the individual's needs. How/why did he choose it in the first place? Who assisted/advised/sold it to him? €200 p.m. for life cover for somebody with no dependents and maybe some small element of savings is a big wodge of money which might be better used for other purposes regardless of how much was put into the policy to date. Check what, if any, maturity value the policy will have and unless it's significant think seriously about cancelling it. If in doubt get independent, professional advice from a good authorised advisor or multi-agency intermediary who can do a more comprehensive fact find/review and give more all encompassing advice than most people here attempting to operate on partial information.
 
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