Tearing up bank notes
MY HANDBOOK of 12 legal ways to rip off a pension fund (Fatcat Press: price on application) is to have a companion vol-
ume, How to benefit from life assurance. The short formula is: don't buy it, sell it. I hope to interest Sir David Walker, who is stand- ing down as headmaster of the Securities and Investments Board and (though I expect him to be busy) may like to take up authorship. New figures from the SIB show what — and who — can be done. If you sign up for the usual deal, a 25-year endow- ment policy, you will, on average, have to keep paying premiums for ten years before you get more than your money back. In the early years, you are paying for the insur- ance company's costs — and 25 or 30 per cent of all such policies never get beyond the first couple of years. On average, that means kissing goodbye to half your money. Ocean racing is defined as standing under a cold shower tearing up bank notes, but life assurance lets you do it in the privacy of the home. Of course, not all companies or their costs are the same. When your policy matures after 25 years, the costs will, on average, absorb 14 per cent of the money which would otherwise go to you — but the most economical company can do it for 6 per cent. The most profligate is taking 40 per cent. Salesmen will now have to put their companies' figures on the line (money in, money back, what goes in costs) and I expect some of the friendly societies to look hostile. 'These figures will only confuse the customers', a trained parrot said today.
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