Making Your Choice

Policyholder 3

Policyholder 3 makes regular payments for the policy which will mature or be surrendered between 2017 and 2021.

- This decision is relatively straightforward

- Under some circumstances, as set out below in the diagram, future special distributions could be more than the offer.

- Under the ‘base case’, with an estate value of £1.2 billion, it is likely that special distributions will not exceed the amount of the cash offer being made

- If the sale of new policies was to fall substantially potential distributions could be higher. However, it could take until at least 2019 (with an estate of £1.2 billion) for possible special distributions to equal the amount of the cash offer being made

- Also, we have varied the amount of the special distributions we calculate could be paid in future. The illustration shows the effect of special distributions being 25 per cent higher in each year in which they occur

- When we do that the possible special distributions could be more than the current cash offer under some circumstances by around 2017 (with an estate value of £2.1 billion) or 2019 (with an estate value of £1.8 billion)

- Under these circumstances the policyholder should consider his or her own personal circumstances and, in particular, whether it is preferable to have a firm amount of cash now as opposed to what is a possibility of a larger bonus added to the policy in future

If you are in any doubt about what you should do please consider taking independent financial advice.