Think twice about surrender values
Your support helps us to tell the story
From reproductive rights to climate change to Big Tech, The Independent is on the ground when the story is developing. Whether it's investigating the financials of Elon Musk's pro-Trump PAC or producing our latest documentary, 'The A Word', which shines a light on the American women fighting for reproductive rights, we know how important it is to parse out the facts from the messaging.
At such a critical moment in US history, we need reporters on the ground. Your donation allows us to keep sending journalists to speak to both sides of the story.
The Independent is trusted by Americans across the entire political spectrum. And unlike many other quality news outlets, we choose not to lock Americans out of our reporting and analysis with paywalls. We believe quality journalism should be available to everyone, paid for by those who can afford it.
Your support makes all the difference.CONSUMERS buying long- term life insurance policies should give more weight to the penalties for early surrender, the Office of Fair Trading says, writes Vivien Goldsmith.
A report on surrender values, published yesterday, concludes: 'Given that many, if not most, consumers will not hold long-term life products until maturity, it is important to ensure that they are alert to the likely returns from early surrender at different times, and to the wide variation in early surrender values.'
New rules will force life companies to show the impact of early surrender in money terms by the beginning of next year. Some of the charges relate to life cover, but the biggest impact comes from commission payments to salesmen.
The report, based on research by the actuaries Alexander Clay & Partners, looked at 60 large life insurance companies. An average 25-year unit- linked endowment policy with premiums of pounds 50 a month would have a surrender value of pounds 157 after one year, pounds 516 after two years, and pounds 2,105 after five years, when pounds 3,000 would have been paid in premiums.
The best surrenders in each of the first five years come from Equitable Life, which delivers pounds 3,244 after five years. Many policies deliver nothing in the first year, including those of Abbey National Life, Britannia Life, Guardian and Sun Life.
MGM delivers nothing after the second year and also takes bottom place after three years. Pearl is the worst performer after five years with a surrender value of pounds 1,248.
Join our commenting forum
Join thought-provoking conversations, follow other Independent readers and see their replies
Comments