Worth keeping my Endowment?

Hi Andy.

I would go for option a.

I had a unit-linked endowment policy from 1988 and my gut feeling was to cash it in last year. The surrender value just equalled the 15 years premiums paid. Was on target for a GBP20,000 shortfall on a 45,000 policy, if I was lucky! As you say, no-one wants to buy a unit-linked policy.

Take the 2k loss now rather than a greater one down the line. IMO 6% is highly unlikely.

Cheers, Martin.

I would second this request for information! I no longer "need" my endowment policy, as I paid off the mortgage ages ago. But I have kept up the monthly payments into it. I could cash it in now instead of waiting till maturity in a few years' time, when the expected "bonus" is likely to be miniscule, contrary to what was said at the time it was opened, when endowment mortgages were seen (and recommended) as the best thing since sliced bread. The Standard Life recommended I look to the open market in order to achieve a higher value, but I am wary of shysters. I can trust Standard Life, but are there really, truly any IFAs out there whom one can equally trust?

MM

In message , Andy Fell writes

It is always possible that you have taken the biggest hit in terms of bad performance, and maybe the insurance companies have learnt their lesson in investment. If this were your view, you would keep it going.

However, if you are now risk averse, and given that you can "guarantee" a saving by using it to pay down the capital on your mortgage, perhaps this is the sensible option.

You wont be able to sell it for more than it is worth because it is unit linked, and its' value is what it is.

The problem is likely to have been caused by the choice of an endowment over an index tracker. Did it have a life assurance element ? Was this required both by the mortgage company & your circumstances ? Subtracting £10 for life assurance, £45 for 96 months is a total investment of £4,320, an index tracker would have returned approx. £4,000. As regards the ULE 6% increase over the year, the stock market, and hence an index tracker, rose by ~8.6%, which is close to the long term average.

Even if the UL endowment fund was invested in other things such as property the figures are still unattractive compared with the risk free return you get from paying down the mortgage imo. Therefore I'd go for option a. You will be able to see the effect this has by plugging the lump sum & monthly payments into the One account calculator.

Daytona

What do you mean "disconnecting"? It was almost certainly never really "connected" except in your mind. It's nothing but a savings plan, with a bit of life insurance built in. Whether it's meant to pay off an interest-only house purchase loan or fund a mega-party on maturity is neither here nor there.

You forgot option (c) which is to make the policy "paid-up". This involves leaving the value which is there already to grow until maturity (or until you change your mind and surrender/sell it at a later date), while simply not making any further contributions. This has the double advantage of freeing up cashflow to divert into the repayment mortgage, while avoiding any potential loss by selling or surrendering.

It's true. Buyers are looking for above-average return, and are more keen on with-profits policies. Unit-linked ones are basically just worth what the units are, and you could sell those yourself.

I'd go for option (d) which is to postpone your decision for a couple of years. If it's turned -3% into +6%, they must be doing something right, and it's worth watching. Also, if life cover is worth having (i.e. if you have family), then don't forget that part of your payments are actually insurance premiums which you would wish to be paying anyway even if the investment element were not of interest.

In article , Ronald Raygun writes ..snip..

I'd support that. I have an under-performing Friends Provident endowment that's been running for 16 years and not assigned to a mortgage. I got a surrender value recently, and then tried to get a traded endowment quote. Those that quoted (on-line) couldn't better the surrender value. Anyway, I monitor the surrender value on a monthly basis via the Friends website. It's actually been increasing at a much larger rate than I could invest it: even of I took very large risks. The death payout is presently about 3.5 time the surrender value. M

So, as I mentioned in my other post, if you were told repayment mortgages were more expensive as an unqualified statement and/or you were sold life assurance bundled in with the endowment that the mortgage company didn't require (i.e. if you die they simply take the house) and you had no dependents, then try making the complaint on that basis.

Daytona

Would Standard Life's surrender value + 10% be achievable elsewhere do you think?

MM

In message , Martin Goldthorpe writes

What fund(s) is it invested in?

In message , Ronald Raygun writes

I think we need to know what fund(s) the policy is investing in. Most funds which are managed by life companies are pretty poor performers and a better return would be obtained from a decent Unit Trust, possibly held in an ISA.

See this:

Mine is the Managed fund. Target is GBP32,300. Amount in 16 yrs 8mths is GBP24,100 at 6% per year.

I cannot stop paying into the policy and leave the existing sum.. The cheeky $$$$$$'s have got it covered.. I've only just found out about this: "If your Policy has a value, then your protection benefits will continue. The cost of maintaining your protection benefits will be deducted from the value of your Policy until this value has run out. Your protection benefits will then end."... Great, huh! There is no option to cancel the benefits, I was led to believe on the phone the other day.

I can't see how it can compete with paying down captial on the mortgage at the current 5.7% rate.. unless I am missing something?

Cheers Andy

Nothing complicated, I just mean I no longer need it for paying my mortgage at the end of the term.

Problem with this is : (Quote from website)

"If your Policy has a value, then your protection benefits will continue. The cost of maintaining your protection benefits will be deducted from the value of your Policy until this value has run out. Your protection benefits will then end."

Maybe, I can't decide... and its complicated to work out exactly :-) It does look like it may be picking up so might be worth waiting a couple of years so that it might at least equal what I paid in.

I don't have any dependants, so life assurance at this present time is of no consequence to me.

Cheers Andy

Must admitt I cannot get 'em on life assurance.. At the time it was taken out as a joint policy with my partner. We have since gone our seperate ways, but I had the policy changed to my name only.

Andy

In message , Andy Fell writes

This is a very poor fund. It under performs its sector and its peers. Its crap.

Do you mean it has 16 years to go or that you have had it for 16 years? The 6% is totally meaningless. According to S&P it has actually grown by

3.7% in the last 12 months against a sector average of 8.87. A mainstream UT such as Jupiter Income (which I have been quoting here for almost 10 years) has returned over 17% in same period.

No, you are not. Surrender the policy, use the dosh to reduce your mortgage. Convert the mortgage to a repayment, but if you need life insurance to cover the mortgage first go to an IFA and get a quote for decreasing term insurance for the reduced mortgage balance over the remaining term and if you like the figure (taking into account the higher mortgage payment you will be making) apply for the new life cover and when it is accepted then surrender the crap country wide policy.

In message , Andy Fell writes

Only read this after I replied to your other posting....

NO!!!! Its crap.

Pack it in now then, i.e. right away, today, now.

In article , john boyle writes .snip.

It's with-profits, but Friends Prov, like most of the industry has been moving out of equities into fixed interest etc. MRG

Oh I see.. This is what gets me.. I'm unaware what is 'good' and what is 'bad' in the recent financial climate.

Sorry I mean I have 16yrs 8mths left.

Where do you get these figures from? How do you conclude that the 6% is meaningless?

Thanks for your help!

cheers Andy

In message , Andy Fell writes

Thanks. In that case, there is no way I would invest ion that fund for another 16 years. Get out now.

Standard & Poors :

I think the 6% to which you refer is merely one of the FSA standard rates that a LifeCo must use for its projections OR the LifeCo have manipulated a period over which they can quote such a rate of growth.

[snip]

Not cheaper, lower.

The regulator does not handle complaints.

The FOS does, but can you rely on them to perform ?

Are all claims organisations rip-offs ?