Liberty policy - wait till maturity?

xrapidx

xrapidx

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*values changed for easier illustration :)


Ok - I know I have a thread on this, but this is a slightly different issue.

Considerations:
My Liberty policy matures on 05 April 2010 with an estimated value of:
R115,000

Current Value:
R111,500

Immediate Surrender Value:
R110,600

Difference between surrender and current:
R900

Current monthly premium:
R2,275 (with two payments left)

Therefore: current value + 2x premium: R116,050

Liberty are charging about R300 per month in various fee's.

----

Now, I owe R80,000 on my one vehicle, it attracts interest of just under R1,000/pm - then I have another unsettled loan of R40,000 which attracts interest of R500/pm

----

I'm considering surrendering the policy now, and settling the two loans above instead of waiting another two months, and paying R1500 in interest for each month until then.

----

I've checked with Wesbank, and there is no early termination interest penalty.

Any advise?
 
First of all you are using your quote incorrectly. Those are illustrations.

Your calculations "Liberty are charging about R300 per month in various fee's." are too simplistic

Your final pay out will depend on the way the market moves in the next few weeks. If you believe the market will be higher then stay with them. However you will lose about R 1000 for each % drop or gain R1000 for each 1% increase.
 
take your money and run. that is my motto in these black swan times.
 
I would tend to agree - that based on the current information available -it would be better to surrender and settle the other debts that you have. Considering the difference in potential growth of your investment and savings in interest that you have to repay.

Surrender I say.
 
chutzpah44 said:
First of all you are using your quote incorrectly. Those are illustrations.

Your calculations "Liberty are charging about R300 per month in various fee's." are too simplistic

Your final pay out will depend on the way the market moves in the next few weeks. If you believe the market will be higher then stay with them. However you will lose about R 1000 for each % drop or gain R1000 for each 1% increase.
Click to expand...

I tried to keep it as simple as possible :) I realise the policy could show good gains in two months... but 'd also be using the saved contribution on another policy which is showing good gains already.

Let me get the exact fee's for you, its one of the main reasons for cancelling:
Guarantee Charge: R22.62
Contribution Charge: R83.68
Management Fee: R173.74
Commission (to some fly-by-night sales man): R12.00

TOTAL: 292.04/pm - any one besides me think this is a bit excessive?
 
My current financial advisor seems to think its a good idea to cash in now.
 
Liberty...

Lets just say that as I'm typing this I'm finalising my paperwork to cancel a Liberty policy... and i studied Actuarial Science, so I'm probably better suited than most to work out if a policy is worth the monthly payments...
 
Markets have picked up in the past day or two - haven't they ?
 
Spoke to a second advisor (friend) - the general consensus is to cash it in.
 
That's why I said recently ... :P

Outta interest purchased in the dip (October 2008)
 
Mines also picked up over the past couple of months, but even taking into account the current rate of increase - I'd still be better of surrendering, paying of my car/loan and using the premium money for something else.

It'd need to show about a 5-6% increase in the next two months to make it break even with settling my debts.
 
Ah - yea, that's pretty tough ... even these were only 3.6% over a month :/
 
So you pay 2275*2 and you get out 4400 more? Makes sense to me to cash in now regardless of your other loans.
 
If you surrender now, you get 110,600
If you wait til maturity you get 115,000, a 4400 difference. However if you don't surrender you have to pay in 2275 twice, which is more than 4400.
 
rorz0r said:
If you surrender now, you get 110,600
If you wait til maturity you get 115,000, a 4400 difference. However if you don't surrender you have to pay in 2275 twice, which is more than 4400.
Click to expand...

Oh - right - yes - that's assuming the market doesn't rise, if they did I'd get more than R115,000.

But - I'd need to get about R122,000 to make it worth my while, which I don't see happening.
 
Anyone know how long it'll take before they close/settle/etc.? I see the shares have already dropped from 2.81 to 2.80 :p
 
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