As a youth, I owned a life insurance ladder. This might be a tried and tested mechanism, but I've never heard anyone else mention such a thing. The idea was my Dad's. On my first day of work, I took out a 10-year, with-profits life insurance policy, at an annual premium of £50, then as now $100, then but not now about 8 percent of my annual salary.
Each subsequent year, I bought another like policy, diverting annual salary increases into a savings program. Life insurance in the United Kingdom had material tax benefits, an irresistible lure in a country where taxing the precious bodily fluids out of every productive citizen has always been the only true blood sport.
The idea of the ladder was not only to encourage a sensible savings regime, but also to provide me, starting in my late 20s, with income as each 10-year policy matured. The proceeds of each policy might reasonably have amounted to £1,000 ($2,000), enough in those days to buy a Mini, then as now my favorite means of transportation.
Four years into the construction of this financial edifice, I discovered roulette, and chose to invest heavily in that instead. Feeling somewhat guilty about this turn of events, I closed out the ladder prematurely with a bumper 41-year with-profits life policy, to mature on my 65th birthday. The annual premium was also £50, its target the ability to buy a 21st century Mini.
Fast-forward to last November. I no longer live in the United Kingdom. The mailing of the 32nd annual payment reminder and a check in return in under four months proved beyond the combined powers of the British and Bermudian postal systems.
My insurance company, Standard Life, an organization run by a man with my very own surname (but no relation), kindly allowed me a grace period, and the policy remains intact. It won't buy me a Mini when it matures, should I live that long, because with-profits has proven to be a very poor basis on which to buy a 41-year life policy, and Minis are now made by BMW. Worse--or infinitely better--I opted out of the British tax club 30 years ago and so have been denied the benefits of a tax break on my life policy. I understand your lack of sympathy in this regard.
Anyhow, the whole kerfuffle of the late premium payment irked me. I hit upon a masterstroke, only mildly to my financial disadvantage. I offered Standard Life the remaining eight premiums in a single go, and said I would wait out the eight or nine years before receiving my final proceeds check. Less paperwork and attendant hassle, fewer bank charges, lower handling costs for Standard Life, big grins all-round. Dead wrong. The British tax system does not allow such a payment to be made or received, or probably even contemplated, on penalty of death. A company and a satisfied customer wish to transact some perfectly legal and sensible business, and the "Gummint" won't allow it. Why, I cannot comprehend. It can't be to protect me (that's the government's job, theoretically), because sooner or later I'll miss a payment by accident and probably forfeit the entire shooting match. I don't claim the tax benefit, so it can't be that either.
Britain is soon to appoint a miserly swine as its leader, whose sole mission is to make life more wretched for its population. No wonder they took the Great out of Great Britain. I urgently recommend to its few remaining citizens that they rise up as one and overthrow the government and, as an urgent first matter of business, repeal the law that won't allow me to prepay my 800 bucks.
If it should happen, you read it here first.
the alternative risk columnist for Risk & Insurance®, lives in Bermuda.
March 1, 2007
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