Royal London and Friends Provident Policies

golden_girl · 17 August 2008 at 3:18PM

Hi Everyone,

I have read many posts about endowment policies and was wondering if I should be worried about mine.
My 1st policy is with Friends Provident:
Friends of Provident details are as follows:
Last letter received dated February 2008 was my yearly statement for 2007.

Matures 24/08/2015 Monthly Payments: £5.13 per month

Details as per yearly statement 2007.
Guaranteed amount for bonuses: £1,111.00
Bonus added to you plan in previous years: £465.28
New bonuses added to your plan this year: £1.16
Total guaranteed amount plus al bonuses: £1,577.44
Bonus rate on guaranteed amount: 0.00%
Bonus rate on existing bonuses: 0.25%

In the event of death the plan would pay out a minimum sum of £3,200.

The final bonus rate is not shown on the bonus statement because unpredictable investment conditions mean that the figure could change during the year.

My other policy is with Royal London.
Royal London details are as follows:

Last letter received dated April 2008 my 2007 Bonus statement.

Matures 1/12/2014 Monthly payments £78.94.
Basic guaranteed value: £19,640
Total previos annual bonuses: £14,572.88
2007 annual bonus: £98.20
Total guaranteed value: £34,311.08.

Sum Assured £19640.00 with profits.

Guaranteed Minimum Death Benefit £40,000.

I had to phone Royal London when I was doing my mortgage in October 2006 and was told the following:

The terminal bonus on this plan 23.3% and was also told it has Declared Bonuses of £14,474.68. They also confirmed it was a low start endowment and not a unitised plan

My mortgage details when I took it out in November 2006.
Nationwide: 4.47% fixed expires January 2009.
Repayment of Interest only on £41,800 and £49,843 under repayment.
Term of loan 18 years
Loan amount £90,045 plus £1598 for fees that have been added to the loan.
Value:£125,000.

When I do my mortgage next I just wondering if it is worth keeping my Friends of Provident policy or shall I cancel and increase my repayment part.?

Does anyone also have any views on my Royal London as this is a large amount and would hate to get to the end with it not covering at £40,000.

Many Thanks for any replies.

Mandy

golden_girl · 17 August 2008 at 4:02PM

I forgot to say as well we got a cash surrender value from Royal London in October 2006 which was £19,404.99

Thanks

mandy

golden_girl · 17 August 2008 at 4:07PM

I forgot to add to my other post that in Oct 2006 we obtained a cash surrender value which was £19,404.99.

Thanks for any replies

Mandy

EdInvestor · 17 August 2008 at 4:37PM

Please supply the following additional info for the policies

Surrender value
Maturity projections

golden_girl · 17 August 2008 at 5:05PM

Hi

I have found the following letters:

Friends Provident:
Letter was dated August 2007.(Think this is the recent letter we have received)

High risk of shortfall. Plan won't pay enough to cover £3,200.

Surrender value on 24.08.07 £1,167.00
Plan ends 24.08.15. What you might get back:
4% plan might be worth £1,930
5.5% plan might be worth £2,130
8% plan might be worth £2,520.
Target amount £3,200.

Royal London

Green letter policy on track. Letter dates June 2007.( I don't remember receiving a letter this year yet)

It does'nt say on this letter about the surrender value.

Plan ends 01.12.2014.
4% projected final amount £45,500
5% projected final amount £47,200
85 projected final amount £52,800.
Target amount £40,000.

I hope this is all the information you needed. I am right in thinking that definately the RL one will cover £40,000. If this hopefully has a surplus I was thinking of saving this amount for when I am old and grey as I do not have an pension. But I do have an endowment assurance policy (industrial branch-whatever this means) again with Royal London which started in 1993 for 34 years. £10,000 with profits. £20.00 per month.

Many thanks and please let me know if you need anymore information.

Many Thanks

mandy

Dick_here · 17 August 2008 at 6:46PM

Industrial Branch means it was one of the policies where an agent used to collect the premiums door-to-door. I assume you now pay this by DD.

golden_girl · 17 August 2008 at 9:42PM

Hi

Thank you.

Yes I do pay by dd.

Thanks

Mandy

EdInvestor · 17 August 2008 at 11:25PM

Sorry but you need to ring up the companies and update the surrender values and projections.There have been significant changes in the markets in the past year unfortunately which will have affected your policies..

golden_girl · 18 August 2008 at 4:39PM

I have called both companies today and they are sending the projections and surrender values in the post.

Many Thanks

Mandy

golden_girl · 22 August 2008 at 1:20PM

FAO EDInvestor

Apologies for the long posting:

Please see below latest figures sent relating to my endowments.

Friends of Provident:
Cash Vaue as at 18.08.08 is £1113.88.
Your policy now:
This policy is designed to enable a mortgage of £3200 to be repaid 24.08.15.
As long as you continue to pay your premiums in future the amount that is already guaranteed to be paid at maturity is the basic sum together with any bonuses as shown below:
Basic Sum Assured: £1111.00
Declared Bonuses: £466.44
Total guaranteed at maturity: £1577.44.
The guaranteed total to date includes all future premiums payable. The future growth of the policy depends on the amount of bonuses added and not on the amount of premiums to be paid.
The guaranteed amount will increase each year as future annual bonuses are added. Another bonus, called a final bonus amy be added to your policy will depend on investment conditions over its lifetime. It is therefore not included in the figures above and is not guaranteed.

What might your policy provide on 24.08.15
4% £1750
5.5% £1910
8% £2210.

Royal London
Cash Value as at 18.08.08 £24770.05.
The illustrations assumes that you will continue to pay 75 monthly premiums until maturity date.
Where is my policy invested.
Royal London Oridnary Long Term Fund
What might this policy pay?
Sum assured at the maturity date £19640
Sum assured in death before maturity date £40000
Your policy is with profits policy which means that we share profits made by the fund by adding annual and final bonuses to the policy. We add annual bonuses throughout the term of your policy and we may add a final policy at maturity date.
4% £44,400
5% £45,800
8% £50,300

Many Thanks for any replies

EdInvestor · 22 August 2008 at 1:47PM

golden_girl wrote: »

FP policy
4% £1750
5.5% £1910
8% £2210.

Hi Mandy

Because your low rate mortgage expires very soon I have used an interest rate of 6% for the calculations, hopefully by Jan you can get something a bit lower than that.;)

If you cashed in the FP policy and used the lump sum to reduce a mortgage @6% also increasing the amount of the loan payment by the endowment premium to maturity, your eventual return would be 2,193.This is almost as good as their 8% projection (which they have no chance of meeting) with no risk. So I wouldn't bother keeping this policy.

RL policy
4% £44,400
5% £45,800
8% £50,300

If you proceeded as above with this policy as well, your eventual no-risk return would be 41,962, which as you can see is significantly below all the projections from the endowment.

We have seen this before with RL policies: the main reason for the better performance usually is that the endowment policyholders are not being forced to fund guarantees issued to pension policyholders in the same fund - many friendly societies and smaller mutuals like RL did mainly endowment/WP bond business rather than pensions, which were dominated by the bigger firms (such as friends Provident).

So you're the beneficiary of that and I'd suggest you keep the seond policy.

Royal London and Friends Provident Policies

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