On a typical premium of pounds 30 a month, they will generally have about pounds 6,000 to spend or invest.
Roddy Kohn, a Bristol- based financial adviser with Kohn Cougar, said: 'People may well find they are being visited by a representative from the company with whom they took out their policy 10 years ago.
'They should not instantly plump for the first product available.'
Mr Kohn recommended first checking the terms of the existing scheme, to see what the options are for staying on for income or further capital growth.
'Depending on how much risk they are prepared to accept, and the amount of access they want to their funds, the choices range from a tax-free PEP to making a single premium payment into a personal pension,' he said.
Philippa Gee, a client manager at RE Gee, in Shrewsbury, endorsed the pensions route as an option. 'Another alternative is to pay off part of the mortgage and use the money freed up to pay regular additional voluntary contributions into a pension,' she said.
The Cazenove Balanced PEP is a tax-free alternative, because it only has a 1 per cent initial charge and does not pay commission to brokers, said Ms Gee, who charges fees for her advice.
Alan Steel, a financial adviser in Linlithgow, near Edinburgh, said: 'People who want to keep their money where it is should remember that there is always an underlying tax drag on the life fund of up to 25 per cent. PEPs do offer a far better tax-free alternative.
'Initial charges do not have to be a consideration. Several of the biggest fund managers now have very low or no front- end charges.'
Ron Moonesinghe, managing director of Pamil Financial Services in Winchester, said: 'Everyone's commitments and aims are different. One PEP I like is Skandia Multipep, which offers a choice of 30 unit trusts from 12 management groups.
'Investors can choose any combination of funds and income can be withdrawn quarterly.'
Amanda Davidson, of Holden Meehan, in London, said risk-averse investors should consider Tessas from building societies or even National Savings, where their money is more secure.
She does have one strong piece of advice: 'Now that people have gone through the tax- free tunnel, they should make sure that future investments continue down that road.'
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