Eagle Star Endowment

We have a 25 year endowment policy with Eagle Star, originally taken out in

1992, and made fully paid up in 2001 when we saw how much they thought we should increase our monthly 'investment'(!!) to be sure of clearing our mortgage on 2017. Altogether we paid in 5361.12 before we saw the light and made the policy fully paid up and changed our OneAccount mortgage loan from an interest only to a repayment loan.

The bonus statement for 2003 has just arrived on the doormat and has earned

15.27 bonus for the whole of 2003. The other figures are as follows:- Basic benefit 3,386.00 Existing bonus 2718.38 New Bonus 15.27 Accumulated benefit 6119.65

I have asked for an estimated benefits at maturity quotation, which we should receive in the next 14 days, and as of close of business yesterday, the cash in value was 3447.01, so question is should we take the money and pay it into our OneAccount to reduce the balance now, or leave it as fully paid up, given that the literature accompanying the bonus statement states that that the return they giving at the moment exceeds that achieved by the fund's assets, hence the reducing bonus rate and also states (more than once) that "a terminal bonus MAY apply to claims on death or maturity but this bonus can change or be removed without notice"

Any points of view would be welcomed!

Thanks

Lyn

Reply to
Lyn
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"Lyn" wrote

I had one too, taken out in 1988, and I cashed it in in the end. I just about got my contributions back.

No idea whether ES's perfromance will improve but 2 things.

- it's been s**te so far, right?

- paid up policies do not qualify for a terminal bonus AFAIK.

hth

Reply to
The Blue Max

Taking £3447 cash for something worth at least £6k seems a bit drastic. You might be able to sell the policy in the market, although prices may not be too good given all the bad publicity.

But presumably the £6.1 k above doesn't include a terminal bonus - or does it? Read the small print to see if that's the guaranteed level or if it includes an element which could be taken away. On the face of it, even with no terminal bonus and no future annual bonuses that comes to a 4.5% return over 13 years which isn't that bad, and in practice there are likely to be some bonuses.

Reply to
Stephen Burke

BUT it will only be worth 6.1k if kept until the maturity date - which is

2017, another 13 years, with no guarantee that there wil be a terminal bonus

Lyn

Reply to
Lyn

You should have just complained and said they mis-sold the policy on the grounds that you would never have taken out such an SPV attached with so many risks on the biggest purchase you were making in your life. I complained, with exactly that and got my premiums back plus compensation for the difference between paying a normal repayment mortgage and an endowment mortgage. Ultimately, I didn't gain because it just puts you in the same position you would be if your mortgage was a repayment from the start, however, the risk of still having a debt at the end of the mortgage term no longer exists.

Reply to
Dave Parker

"Dave Parker" wrote

I complained too on the basis that everyone who bought an endowment knew perfectly well what they were doing, but were cynically raiding the bonus pot I was relying on. So I figured I better had, too. Unfortunately I was timebarred by about 3 weeks.

The people who really got mis-sold were those who took out repayments. They missed out on a free retrospective option. Either your endowment did well and you made out, or it went t*ts up and you then complained and were put back onto a repayment basis. So if you had an endowment you couldn't possibly lose.

Reply to
The Blue Max

Indeed, but as I said that comes to 4.5% a year over that period, which is not that bad (about the same as gilts), and to get only that there would have to be no more annual bonuses or a terminal bonus, which seems pretty unlikely.

Reply to
Stephen Burke

OTOH, the average growth so far versus premiums put in has been negative, so there is no reason to *expect* growth, and there is the risk that ES may itself go t*ts up sometime in the next 13 years. The retrun on offer is so poor that oen might as well stick it in a bank.

Reply to
The Blue Max

I rather think I agree with you - 4.5% can already be beaten by putting it straight into our OneAccount and getting 5.2% - and that's before interest rates rise, which we all know is likely in the very near future. The literature that came with the bonus statement gave me little hope that things would improve, so I think a bird in the hand and all that..................

Lyn

Reply to
Lyn

Yes quite, and it royally pissed me off when ES wrote to me telling that they'd screwed up and underpeformed so would I please pay them more money. Eh? Their error is somehow their sales opportunity???

As you say, you can easily beat that return in a bank with less risk and more flexibility. I spose the surrender value could improve over the next 13 years but I also suspect ES have rebalanced away from equities and into cash and bonds, so even that seems unlikely.

Reply to
The Blue Max

That's usually because you pay a large up-front commission, but that money is gone whether you surrender now or not.

There is every reason to expect growth, unless you expect stock markets to fall over 13 years - even then the fund is now probably quite substantially in gilts and high-grade bonds, so the stockmarket would have to fall quite a lot, in which case the economy will have collapsed. Not likely IMO.

Where do you find a bank which will guarantee 4.5% (presumably after tax) over

13 years?
Reply to
Stephen Burke

"Stephen Burke" wrote

Not from the Eagle Star, there isn't.

Eagle Star guarantee nothing and IIRC have indeed paid nil bonuses. In the last year I held teh policy I put in 600 and teh bonus added was 100, a loss of 500.

Reply to
The Blue Max

If you expect your annual bonus to exceed your premiums, you are very optimistic.

Reply to
Terry Harper

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