Monday, 21 November 2011

Life Insurance

Thirty eight years ago, in 1973, I was conned into buying a Life Insurance Policy. I was young and green and a sharp salesman signed me up to pay £10 a month.  As I write I am looking at the 'Investment Plan Proposal' which I was shown at the time.  It promised to turn my contributions (which came to £3,876.00 over the period of the policy) into  £38,130. 00. So how's it done? Well on paper not badly. The letter I received from Friends Provident the other day told me that the projected maturity value was £33,582.70.  But it has only done well 'on paper' because of course there is the little matter of inflation to consider. Sadly £33,582.70 in 2011 pounds is actually only the equivalent of around £2,000 of the 1973 variety such are the ravages of inflation.

In other words my investment has been a pretty much waste of time. Why has my nest egg not done better? Well at a guess it is partly because of costs incurred  and partly because of cretinous investment decisions by those paid shed loads not to make them.  Incidentally the great and the good who squeal for the imposition of a so called  Tobin Tax on all financial transactions, don't seem to understand that the transactions which bankers do are not done with 'bankers money,' because strangely they don't have much of their own, but with the money which belongs to millions of small savers like me.  In other words if there was to be such a tax yet another layer of costs would be added and our returns on our investments would be even more miserly than they are already.            


  1. Nice information, many thanks to the author. It is incomprehensible to me now, but in general, the usefulness and significance is overwhelming. Thanks again and good luck - California State Contractors License Bond

  2. Price then, price now. Taken from "This is Money" financial website of the year.
    1. Amount: (price then) £2000
    2. Year: 1973.
    Calculate Result
    • Result: £20,800'

    Actually Francis, you have not done too badly.
    A return of £33,582 beats inflation over the last 38 years by nearly £13,000.
    Bear in mind also that F.P. did not have the whole of your £3876 outlay to work with for the whole 38 years, but only, on average, half of that sum, as you did not pay it all up front, but spread your premiums over the whole 38 years.
    Best regards
    Brian Latham

  3. Humble Mr Fulford.

    A few days ago my friend and I were talking about your first documentary on channel 4. He had never heard of you so after a quick search on YouTube found the majority of your program's. He then found your blog, of which I have been reading you blogs. My only quarm is that you don't blog on a more regular basis. Please take heed with an earlier comment and get a camera and take photos of the subjects etc of which you write about.

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