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Axa Insurance Bonus Cashbuilder Plus Plan

Qualifying Policy (Endowment)
Published 17 November 2009
Helpful? 17
Open Quote This type of savings plan should have been killed off years ago. Avoid.End Quote
Thumbs Up
  • Um...£30 Argos gift card when you sign up?
Thumbs Down
  • Very inflexible.
  • High charges.
  • Lack of transparency.
Candid Rating
Candid Charges

Not explicit, but probably 1st years contribution.


Not explicit.


Penalties, but not explicit.


Difficult to establish as they're not explicitly stated.

Endowments have an appalling reputation, thanks to a history of high charges, poor performance and mis-selling. So it’s rather surprising to see AXA pushing this endowment via its Sun Life Direct brand.

The plan targets those aged 18-55 who want to save £10-£100 a month over 15 years, with the dream of building up a lump sum for a dream holiday, children’s wedding/home deposit etc.

Beneath the marketing veneer it’s a 15 year endowment that invests in the AXA Sun Life With-Profits fund, providing life cover equal to three quarters of your total contributions over the 15 years. Sun Life increases your monthly payment by 20% at the end of each of the first five years, a sneaky way for them to make more money out of you.

Charges, which will likely wipe out your first year’s worth of contributions, are typical for an endowment and could reduce a 6% annual investment return to 3.9% (according to Sun Life’s own projections).

Investment returns are effectively taxed at basic rate, which cannot be reclaimed, a reminder that endowments are just plain wrong for non-taxpayers. Higher rate taxpayers have no further tax to pay at maturity.

The AXA Sun Life With-Profits fund invests around 44% in stockmarkets, 35% in gilts and corporate bonds, 12% in property and 9% in cash or equivalent investments. At least it did on 31 March 2009, which is the last time Sun Life released the information. Therein lies one of the problems of with-profits, it’s difficult to know exactly where you stand at any point in time because providers usually only publish this information a couple of times a year.

Nonetheless, this investment split is fairly sensible and while not one of the strongest with-profits funds, there are worse.

With-profits works by using some of the fund’s annual profit to pay an annual bonus, while storing any additional profits to smooth over returns during periods when the fund falls in value. You might then get an additional bonus on maturity if there’s enough 'surplus' profits stored up. Good idea if it works, but in practice the concept has struggled over the last 10 years.

There are two big potential drawbacks with this investment.

  1. It’s inflexible. You could be penalised if you don’t make all the monthly payments over 15 years. If you cancel before then, especially within the first 10 years, you may struggle to get back more than you’ve paid in.
  2. I believe the chances of making a worthwhile amount of money from this plan over 15 years are slim. Many savers might be better off saving into a good cash or stocks & shares ISA. They’re more flexible and, in the case of cash, safer.

In summary, this type of savings plan should have been killed off years ago. Don’t be seduced by glossy marketing with photos of happy families or the promise of a £30 Argos gift card for signing up.

You can read more about endowments and with-profits on our Life Company Investments page.

Web Link: http://www.sunlifedirect.co.uk/life-cover/guaranteed-over-50-plan

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