I have heard that some life companies have been lifting their MVAs when ones
>sells an endowment. Anyone heard whether Abbey Life are to follow suit or
>how I might argue my way around it? Is there a better time in the
>month/year to sell to minimise it?
>
I wouldn't expect an MVA to be applied at all if you SELL a policy as opposed to SURRENDERING it. If you sell the policy, the investment stays in the insurer's with-profit fund so there's no reason to apply an MVA.
IIRC, Abbey Life are unit-liked only? If so, I doubt you will find anybody to buy it.
Also, MVAs should only apply on surrender not sale.
My mistake - I am surrendering it not selling it as, like you say, it is unitised so no-one wants it.
So no way of avoiding the MVA?
AFAIK Abbey Life does not have any with-profits funds and it's only with-profits that suffer MVAs. Unit linked funds go up and down with the weather so they reflect the true value of the fund and do not need the protection of an MVA. Can you confirm that your funds are with-profits?
Rob Graham
The fund is split between a 'managed life' funs and a 'with profit' fund. I presume that is why there is the MVA? And they are unitised so no use to anyone else...
Thanks for the info.!
Markets have been improving, so MVAs might be lifted in a year or two, but who knows? Also some policies have specific conditions under which you can get out without an MVA, read the terms carefully.
You might be one of the 1,000 with-profit customers that Abbey Life have (formally Target Life or was it Hill Samuel Life business). Despite what is said above, Abbey Life do have a small (30m I think) with-profit fund. But I don't think they have MVAs on those classes of policies. Phone them up and ask the nice person who answers the phone.
I'm still not quite sure or convinced.
Do you have an Abbey Property Plan or Guaranteed Planned Investment Endowment? In which case your benefits are determined in accordance with your policy conditions which state there is a deduction for capital gains tax on surrender.
Did you ask the company whether the 3% figure you stated related to this or something else?
I did call them - I have three policies and each one had a value and then a surrender value some 3% lower for the MVA... It would appear I am stuck with it!
with-profits?
The plans are 'Endowment Mortgage Plans'. The fund details say that the final value if surrendered early will be adjusted by an MVA - which is applied if 'the returns achieved from the underlying investments will not support the declared rate of bonuses.' The fund seems to be split between a managed life fund and a with profit life fund.... That's about all the info I can find I think!
Rob,
I guess so - they get you somehow every time!!!
Thanks for the assistance, Adrian
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