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Life Assurance Policies

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  • 01-11-2009 3:45pm
    #1
    Ordinary Joe
    Registered Users Posts: 23 ✭


    Hi,
    I've a 5 year life assurance policy that is about to mature, I'm thinking about whether to leave it where it is or move it or just put into a deposit account. Before I decide I've a question which maybe somebody can help me with

    Does the Deposit guarantee scheme (Irish & others) protect the funds in a Life Assurance policy?. I've looked at the various web sites and find it difficult to tell.

    Tks
    OJ
    Tagged:


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    #2
    amdublin
    Moderators, Category Moderators, Arts Moderators, Entertainment Moderators Posts: 20,653 CMod ✭✭✭✭amdublin


    Life assurance plans generally pay out a sum (the sum assured) if you die.

    Does your plan have a Life cover benefit (as above) plus a savings element to it???

    What type of plan is your policy? Please describe it in more detail.


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    #3
    Ordinary Joe
    Registered Users Posts: 23 ✭Ordinary Joe


    Thanks for responding.

    I don't think its really a Life Assurance policy. Its one of those funds that tracks stock market indices. You put a lump sum of the money in for 5 years at the end of which you get your capital sum back plus whatever earnings the funds made. The gain is then taxed at 23%.

    This one is run by AIB so I'm wondering if its covered by the deposit guarantee.

    Tks
    OJ


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    #4
    amdublin
    Moderators, Category Moderators, Arts Moderators, Entertainment Moderators Posts: 20,653 CMod ✭✭✭✭amdublin


    Yes it's not an Life asssurance policy! :)

    It sounds like an investment plan/bond of some kind. Sorry can't really help there.

    Maybe change your thread title and you might get other responders?


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    #5
    broker2008
    Registered Users Posts: 750 ✭✭✭broker2008


    Ordinary Joe wrote: »
    Hi,
    I've a 5 year life assurance policy that is about to mature, I'm thinking about whether to leave it where it is or move it or just put into a deposit account. Before I decide I've a question which maybe somebody can help me with

    Does the Deposit guarantee scheme (Irish & others) protect the funds in a Life Assurance policy?. I've looked at the various web sites and find it difficult to tell.

    Tks
    OJ

    No it doesn't


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    #6
    Pablo Sanchez
    Closed Accounts Posts: 1,207 ✭✭✭Pablo Sanchez


    amdublin wrote: »
    Yes it's not an Life asssurance policy! :)

    It sounds like an investment plan/bond of some kind. Sorry can't really help there.

    Maybe change your thread title and you might get other responders?

    If it was taken out with a Life co then its a life policy, and no, Life co's are not covered under the bank guarentee scheme, however as their model is completly different from banks (ie not involved in lending) there should not be that much risk involved.

    If you would prefare to be safer then try Iirsh Nationwide, they have a good rate on their new demand deposit account.


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    #7
    Ordinary Joe
    Registered Users Posts: 23 ✭Ordinary Joe


    Folks, thanks for responses. Looks like it makes no difference from a security point of view (other than if I stick it in a deposit) which of these plans I invest in. Probably move it to Zurich

    OJ


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    #8
    Long Onion
    Closed Accounts Posts: 1,342 ✭✭✭Long Onion


    The answer to your question depends on the type of investment. If the plan was issued through a life company, It is covered under the Investor compensation scheme which believe covers 80% of your investment up to a max of €20k.

    If it is a deposit based investment (as in many kinds of tracker bonds issued by banks) then it would be covered under the government guarantee scheme. As the tax levied is 23%, my guess is that it is the latter.

    From a security point of view, the depositor protection scheme covers individuals up to €100,000 per institution, this covers all deposits (and deposit based investments) and is open ended. It currently covers the majority of institutions operating in the state (Rabo and NIB are two noteable exceptions) Amounts above this are covered in some institutions by the government guarantee scheme which is due to expire in sept. '10 (but will likely be extended).

    Tracker Bonds will usually have a 'counterparty risk' attached (a sepertae investment house will underwrite some element of the bond, there is a risk that this company may go under) in my mind this is a greater risk than the bank going under - though still slim. Systems of capping, low participation rates and averaging are regularly applied to make the bond profitable for the seller, these mean that more often than not, such bonds rarely return anything above average deposit rates - bt you have foregone access.

    If safety & access are priority, look for a good fixed rate or a good variable rate from which you an feed a regular amount into high rate regular saver account. If it is return you are after, look outside of trackers, there are capital secure investments which will grant early access and do not operate averaging, capping or low participation rates (though do enquire as to encashment penalties and und Management Charges).


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