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Phoenix clients get cover warning on cash-in offer

Advisers are warning Phoenix Group policyholders they may give up irreplaceable cover if they take up the company’s offer to cash in policies early.

Phoenix is writing to 2,500 Phoenix & London Assurance, Sun Alliance and London Assurance Company, Royal & Sun Alliance and Saga policyholders with whole of life paid-up policies with a value of up to £2,000 to offer them the option of cashing in the policy now with no fees or retaining the policy.

Phoenix Life chief executive Mike Merrick says: “We recognise that many customers will have taken out these policies to cover funeral expenses but, with the impact of inflation, the real value of these policies is eroding. We want to offer these customers a choice to keep the policy in force or take the benefits now to save or spend as they choose.”

Phoenix will extend the offer to other paid-up whole of life policyholders if it proves to be popular.

Policyholders have six weeks from receipt of the letter to tell Phoenix if they want to cash in their plans. If they do nothing or miss the deadline, their policies will remain in force.

Master Adviser senior partner Roy McLoughlin says: “Even if a policy value is being effectively eroded through charges, sometimes the life cover can be so valuable it is worth either topping up the policy or letting it run its course.”

Plan Money director Peter Chadborn says this is a proactive move from Phoenix but suggests that clients must be careful they understand what they are giving up.
He says: “It could easily be quite difficult to replace the cover, as the customer could now be uninsurable.”

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