Jobless cover cut just when I needed it

I remortgaged with Standard Life Bank in 1999 and bought accident, sickness and unemployment insurance. The benefit was £387 a month for a maximum 24 months.

I was made redundant at the end of May and claimed on the policy. On 5 June, Standard Life told me it was changing the underwriter from Axa to Pinnacle and I had to transfer to a new policy which paid out only £250 and for only 12 months.

Since then, I have been passed backwards and forwards between the three companies. Looking for a new job in difficult economic times is stressful enough.
HR, Abingdon

According to Standard Life, Pinnacle took over from Axa on 10 July, after you left work, but your claim was not triggered until 19 July when your claim for benefit was first recorded at the Job Centre. Axa says Pinnacle came in on 1 July but your claim was not valid until 31 July when your wages in lieu of notice expired.

Either way, Pinnacle is clearly responsible for paying. Standard Life says it was disappointed to hear how you had been messed around and, to compensate, has persuaded Pinnacle to pay you the amount promised under the old Axa policy for one year. If you are still out of work, Standard Life will pay you for a second year. The first £387 has already gone out.

Will new pension credit cost me my state benefits?

I receive a small occupational pension, and should qualify for a modest rise through the pension credit scheme. Will this be deducted from my housing and council tax benefits?
MM, Cambridge

The state pension credit scheme starts in 2003. It will guarantee a ?100 a week pension for single people and ?154 for couples. Your existing benefits will not be affected because the capital limits have been raised to reflect the changes.

Lost documents not a lost cause

My mother died eight years ago and left my niece a flexible investment bond with Crown Life. My brother lost the documents while moving house. He recently found them but the policy expired two years ago. We cannot locate the company.
CJ, Brighton

Windsor Life has taken over Crown Life's investment business. The pension business went to Century Life. Windsor Life has your mother's policy on file with, strangely, a note recording her death. Normally when someone dies the beneficiary makes a claim and the money is paid out but this did not happen with your mother's policy.

Your niece should send the policy, a copy of your mother's will and the probate by recorded delivery to the address in Telford you now have. If your niece did make a claim, she should ask for interest to be paid from the date of your mother's death. Windsor says it will not pay interest if she made no claim as it is not its fault that the money was not paid eight years ago.

Presents or inheritance?


Mum would like to pay off a sizeable chunk of our mortgage, around £20,000. How can she do this without any of us paying tax? She is already giving £3,000 to our kids, using last year's allowance with this year's.

We thought we could overpay our mortgage, taking cash from mum to pay our weekly bills (tedious). Our accountant suggested - but with the caveat 'fingers crossed' - that she write cheques of varying amounts each month, say £3,000 to £5,000. Or could she buy Isas and transfer them to our name? We've also thought about playing mum at poker - or maybe snap! - and betting large amounts but that sounds desperate.

Is the Revenue really interested in tracking relatively paltry transfers?
RL, Southend-on-Sea

Oh yes, the Revenue is interested in small amounts. I would be wary of an accountant giving what he admits is dodgy advice. While gambling winnings are tax-free, games must be formally set up and fairly run which means mum must lose a lot of the time. Isas cannot be transferred to anyone else.

But there is no need for such complications. Your mother can give you £20,000 now and no tax is payable at this point. If, on her death, all her possessions including the gift are worth less than £250,000, her estate pays no inheritance tax. In fact the figure will be higher by the time she dies.

If she is worth more but lives for seven years after making the gift, she still pays no tax on the £20,000. The tax reduces if she survives just three years.

As well as giving your children £3,000 a year, she can, with the Revenue's approval, make regular payments out of her income such as Christmas, birthday and wedding anniversary presents. Although, if this year she gave you £20,000 instead of the usual box of hankies, the Revenue could argue that was not 'normal'.

Look at Inland Revenue leaflet IHT2 available on www.inlandrevenue.gov.uk.

Staying on track with repayments


I have a tracker mortgage with Halifax at 3.55 per cent finishing in December. I also have a £10,000 five-year Halifax loan at 5.8 per cent secured on the property. My Army pension cov ers the loan which I would like to keep going so it is paid off in four years' time.

Halifax has offered me another tracker at 5 per cent but everyone else I ask for a quote insists that the loan is added to the mortgage. What can I do?
PP, Eastbourne

If you moved the mortgage but not the secured loan, the Halifax would grab the loan as a first charge on your house. No lender would grant a mortgage as a second charge.

Ask the Halifax if it will postpone the charge on the loan, keeping it second, so a new lender can take a first charge. You might have to pay solicitor's fees.

Or check if there are penalties for repaying the loan early because you could consolidate the two into one mortgage and then overpay each month with your Army pension. This has the same effect as repaying the loan within your timescale, at less than 5.8 per cent, although the loan is no longer ring-fenced.

Endowments in redundancy

I have recently been made redundant and decided to pay off my mortgage.

I am left with three endowment policies with three, six and nine years left to run from their original 25. They cost £100 a month, which is a reasonable proportion of my reduced level of income. Should I have them made paid-up, given the uncertainties about returns in the near future?
WD, Horsmonden

Ask the insurance companies for a surrender value, a paid-up value and an estimated maturity value. It is not a good idea to cash them in if you can possibly afford to keep them going but getting an idea of the secondhand value will help you weigh up your options.

· Email Margaret Dibben at money.writes@observer.co.uk or write to Margaret Dibben, Money Writes, The Observer, 119 Farringdon Road, London EC1R 3ER and include a telephone number. Do not enclose SAEs or original documents. Letters are selected for publication and we cannot give personal replies. The newspaper accepts no legal responsibility for advice.