Paid Up 'penny Policies'

[granny grump]

My friend has just sent of 3 x policies paid up in 1950 to the insurance company following the death of her mum. She has been offered £18.99 for all three policies. The policies were 1d 4d 6d

She just feels that after all this time £18.99 isn't much to say that they werepaid up all that time ago. Is there any way of working out what £18.99 would be worth in old money and is this a fair return

[factor-fiction]

It depends on what the policies were worth in 1950- I think we need more information on that. When you say 1d, 4d and 6d , were those the payments? Per month? Over what period?. What was the sum assured?
You can look up the values of old money but a rough figure would be that if the policy had increased in line with RPI it would have been worth about a £1 in 1950. But if it's a death benefit the amount was set many years ago and I don't think it would have been increased each year- the sum assured may indeed have been 18.99

[granny grump]

Thank you factor yes 1 4 & 6 were the premiums but I'm not sure about the other inforrmation - we'll have look later and get back to you

[Old_Jim]

Having sent the policies back, it's too late to check them. They will have had a sum insured payable on death. Premiums are usually payable for life or up to age 85. You now divide the number of premiums actually paid by the number that would have been paid up to death or 85 (whichever came first) and multiply that by the sum insured. If it was a profit-sharing policy, you can multiply the answer by around 3 - depending on the insurance company. If that's a poor return, the policy was poor value when it was taken out.

[heathfield]

In terms of the value of money, £19.00 in 2014 is equivalent to £0.54 in 1950. On the other hand, £19.00 in 1950 would be the equivalent to £479.30 in 2014.

[factor-fiction]

Yes, heathfield's figures look about right. I think his point covers it.The sum assured may have been only £19- that would have been equivalent to around £500 nowadays so was seen as being a reasonable contribution towards a funeral. Or the death benefit may have only paid out if death occurred in a certain period, so once that passed the policies only had a nominal value.
The devil will be in the detail here, but in my experience many of those penny policies do only pay out small amounts- industrial branch policies had very high costs- the premium collector's pay would come out of the premiums so that would have taken a fair chunk

[granny grump]

Thank you all for your help - I will pass on the information

[boxtops]

Once a policy is "paid up" (as I recall from my time working in insurance), the insured person doesn't pay anything else in, and the sum assured is fixed at what it was at that time - no bonuses etc are accrued. From 60 years ago, the companies may well be correct.

[granny grump]

Thank you boxtops

[Peter Pedant]

When a frenz' mother died aged 91 there were a few penny policies and this sounds like a standard pay out.

They were intended to cover the funeral costs and clearly £20 wont cover diddly squat.

Take the money

in life (ha !) you make good and bad investments and this sounds like a dog - but it is only 20 knicker. Did you see the art prog where the collector had spent £100 000 on a fake chagall ?

[granny grump]

Thank you PP I think that you are right