Canada Life CL gilt and Bond fund

mr j tayto

Hi all,

I was wondering if anyone knows about the Cl Gilt and Bond funds?

My dad has an old life insurance policy with Canada Life (Irish life now) which has an investment side as well as life cover. The investment side is currently worth around €26000 through the CL Gilt and Bond fund, and he has been advised by his financial advisor to cash in on the investment but still leave the life cover side of things as is.

Does this sound like a good thing to do or would it be better to leave the investment in situ and hope that it continues to grow? He is aged 60 with no real debt to speak of.

If anyone could advise I would be most grateful.

PaulM1977

Probably paying more to the life cover and less in to the savings as he gets older, due to being more at risk of a payout due to his age, so the savings part may not be huge. Ask him for a breakdown of the premium and how much goes to each part.
What is the adviser suggesting he invest in? Is it from an Irish Life employee or an independent broker?

mr j tayto

PaulM1977, Thank you for your reply.

The advice is from a tied agent/financial advisor. No investment advice, basicallyjust take the money and use it.

The life cover is currently more or less the same value as the investment side of things and that wont change.

As far as he knows the cost of the cover remains the same for the duration of the policy. It's an old policy taken out in late 70s early 80s.

PaulM1977

If you father wants to cash in that part of the plan and isn't going to reinvest it, then if he would like to do this then I can't see why not. If he wanted to look at reinvesting it then he would be better off getting independent advice regarding what to invest the funds in. The savings part of the plan will only be affected and not the life cover so if he wants to keep the plan going he should be able to do so, without knowing his own personal circumstances in regard to his health, at his age he may not be able to get life cover due to medical history so definitely keep that part going.

PaulM

mr j tayto

Thanks PaulM,

As far as I can make out from my dad, the life policy cover will remain in place even if he takes the investment side of the policy,which he is seriously considering, however he's unsure if the premium will remain the same as it currently is, but the broker wants him to take out over 55s life cover (no medical) and cancel the old policy altogether. This does'nt make sense to me as the over 55s insurance is nearly 3 x times more expensive than his current old C/Life policy with little difference in the amount of life cover. I would imagine that even if the cost of his policy was to increase by 100% it would be more to his advantage to leave things as they are?

I would hate to think that he is being sort of forced to take out a dearer insurance but the broker seems inclined to rush him into a decision, hence the reason for my post.

I think it might be wise for him to talk to another independent advisor.
Regards,
JT.

PaulM1977

It sounds like the guy from Irish Life is putting a bit of pressure on your father, for his own personal gain, i.e. the commission he is likely to get from someone taking out a new policy that does not suit your fathers circumstances.
If your father had no life cover and couldn't get any due to his medical history then fair enough the Over 55's is an option but as he already has cover which costs much less than the Over 55's then it doesn't make sense to switch, in my opinion.
Best to speak to an independent adviser to get a second opinion.

mr j tayto

I had sort of come to the same conclusion myself. My dad is going to speak to another financial adviser. Thanks very much for your help.

NewCorkLad

In effect at the moment your father does not have life cover as generally the Irish Life policy will only pay out the higher of the savings or life cover. With these old policies generally when you take a withdrawal from the savings element your life cover also reduces by the same amount so if he withdraws his savings there will be no life cover element to his policy, which would leave him in the same situation he is in now except the money is in his pocket instead of a fund. You need to ask your father a few questions:

Does he still want to be paying for life cover?
Does he need life cover?
Could he use his savings now for something?
If he spends this money now does he having other savings put away for a rainy day?

Another element to this is how his funds are invested. There are large fears in the markets at the moment that bond and gilt funds could take a huge hit when bond yeilds start to rise, what element of risk is your father willing to accept?

mr j tayto

NewCorkLad
"In effect at the moment your father does not have life cover as generally the Irish Life policy will only pay out the higher of the savings or life cover. With these old policies generally when you take a withdrawal from the savings element your life cover also reduces by the same amount so if he withdraws his savings there will be no life cover element to his policy, which would leave him in the same situation he is in now except the money is in his pocket instead of a fund."

Does he still want to be paying for life cover? Yes, it's not a huge amount of money he's paying anyway
Does he need life cover? Yes, like most people his age "it's to cover his funeral costs", his words,not mine!
Could he use his savings now for something? Yes.
If he spends this money now does he having other savings put away for a rainy day? Yes, a small amount.

He has spoken to another advisor who checked the policy and apparently even if he decides to take the money, the life insurance side of things does'nt change. He is now leaning towards taking the investment side of the policy and continuing with the life cover.

You observation of gilts and bonds falling in the future makes sense especially with the way things are currently with Greece and the possible knock on to the €, thanks for your response.

NewCorkLad

mr j tayto wrote: »

He has spoken to another advisor who checked the policy and apparently even if he decides to take the money, the life insurance side of things does'nt change. He is now leaning towards taking the investment side of the policy and continuing with the life cover.

If withdrawing from the policy will not affect the life cover then he has no need to be looking at setting up other life cover, however be aware that withdrawing the funds could lead to an increase in premiums in the future to maintain the current life cover, other than that tell him enjoy his spending spree.