Axa Sun Life

A simple explanation of how the Axa cashbuilder policy works, is as follows: The plan runs over 15 years, with initial contributions of ten pounds per month, increasing by two pounds annually, until your monthly contributions have gone up to twenty pounds, which you continue to pay for the last ten years. Each year a bonus is added to your savings and at the end of the 15 years, you receive a tax free lump sum. It sounds good in theory, but personally I am not convinced. I took out a policy with Axa about five years ago, thinking that ten pounds a month sounded like a reasonably small amount to save and even when it did go up I wouldn't mind the increase, as long as I got a nice pay out in the end. Unfortunately though, I didn't really thinking the implications through; I foolishly assumed that my earnings would go up over time so that it wouldn't be difficult to keep up with the increased monthly amount. 15 years is however an incredibly long time - I have since become a single mum and am already paying £20 per month. In theory you can cash the plan in early, but the penalty clauses mean that you wouldn't get anywhere near what you've paid into it back and you can't even freeze the contributions without being penalized, so you just have to grin and bear it or lose an awful lot! There are also other options, such as selling the policy to a company, specialising in purchasing plans before the maturity date, but still with a financial loss, so in my eyes I have no option but to carry on paying. It wouldn't be quite so bad, if my savings were at least growing at a steady pace, but the bonuses that are added annually are pitiful and I am beginning to wonder if I would not have been better off finding a regular savings account with a really good interest rate to pay the money in to. At the end of the day some banks are paying up to 10% interest these days. Admittedly you have to pay tax on the interest, but even taking that into account, I can't see how the Axa policy will give anywhere near that return!