With profits air raid warning RED

[Al R]

Humour,

One or two asumptions - you are in your 40s and a Higher Rate tax payer. Please don't take any of this as advice, but maintaining a poorly performing endowment is like throwing good money after bad - in principle, anyway. It gives you life insurance, sure, but does it fit in with your expectations, your objectives and does it fit in with your circumstances? Possibly not. So why have you still got it? If the maturity value or surrender value is below par, the chances are, its not going to suddenly turn around, but we adopt pressonitus, because we would rather get divorced than change our banks or make big financial decisions.

If it isn't covering anything, or if you can cover a mortgage commitment in other ways, have you considered cashing it in, taking the hit, but then putting the lump sum into a personal pension, invested in funds and with a strategy which match your current attitude and capacity for risk? You would get an uplift of 40% (tax relief as a Higher Rate taxpayer, and which would mitigate the loss of 40% that you have sustained) and any investment growth on top, although you couldn't touch it (currently) until aged 55. Make sure too, that you don't breach your annual pensions contribution limit and don't select a pup of a pension. If you need liquidity, consider an ISA. But you'll be swallowing the loss whole. You'll also be exposed possibly, with life insurance. These days, some people need an Offshore Bond too. The state is looking at ways of slamming down on tax reliefs and it can work efficiently and well if you require income.

The RAF has tightened up considerably on allowing Financial Sector exposure to servicemen and women. I do some presentations, but they are completely unbiased and impartial (I work as a volunteer for the Money Advice Service - an offshoot of the FSA) and people these days, are far better informed. Sensibly, people in the 20s are considering retirement planning properly. Reduced faith in a mil career, an uncertain AFPS future and more flexible work patterns mean that someone setting an element of their income aside now, has a greater chance of hitting income in retirement goals at 55, than waiting until their 30s and 40s. It means they can adopt a far more leisurely, far lower risk strategy which might hit the objective at, say, 48, instead of sweating it out right down to the wire, at 55 or 60. The money can then be freed to enjoy life with a partner or getting the kids through Uni. A personal pension does not offer you a guarantee, but there is no such thing in life as a guarantee. It offers you the potential for good growth, tax relief and incredible flexibility (new pension Regs mean that if you hit a certain target for secure income, ie; via AFPS, a personal pension can be 'plundered' in a far quicker way at 55 too). Make sure any non income earning partner has considered getting one too!

With regards to life insurance for 20 year olds, it can be suitable. Many 20 year olds don't have dependents in the literal sense, but getting life insurance early on and during initial training, before you have notice to deploy anywhere, before you start getting a bulging medical file, when you are young can have a massive effect on lowering your premiums, which will pay off quite quickly. But did you need life cover with an endowment? No, probably not - especially if you didn't even have a mortgage! There are a few life insurance companies out there who do no not increase the premium for RAF fliers (some, anyway) and RAF pers in general. They will load or 'rate' though, army personnel, but you do have to ferret them out or get someone to do it for you, and sometimes, you have to strike whilst the iron is hot.

Also, some younger clients have dependent parents, or siblings who are their nominated beneficiaries. When kids come along, and when you DO need cover, its usually the last thing on your mind and certainly not as high on the budget radar as nappies. Of much more importance though, is Critical Illness Cover and Flying pay Insurance. CIC is now a well priced and detailed product and a sensible option to consider for anyone starting out on a potentially well paid career and who might not have dependents to worry about, or have financial support in civvy street; after all, when you're dead you don't needto buy fuel or food, but when you're crippled and discharged, you still do. Flying pay protection can be had for £15+ a month and provides ongoing income.

edit: Please don't take any of that as advice; go and see someone you trust to advise you or make your own call. If you would like to pass me details of the policy by PM, I'll tell you how it sits in the grand scheme of things and compared to other policies - some are performing far worse than others. I understand where you're coming from though; I'm now an IFA, dealing with RAF clients, and I was sold a couple of rubbish policies too, at AKR in 1987.. but I cashed them in years ago. Please don't hesitate to contact me if you need an information based steer.