Should I cash in my endowment?

saveonarola · 21 February 2011 at 11:53AM

@Meeper

Much appreciate the response. Yes, I'd forgotten that the annual limit for Stocks and Shares ISAs is twice the limit for Cash ISAs, but I didn't know about collective investment accounts and, as you say, the CGT allowance would more than cover any gains. The problem, of course, and another reason I will likely keep my endowment policy, for all its faults, is that by investing the whole £10,000, say, in one go, you're more exposed to the cycle of the market. I would rather save a sum monthly, as with the endowment. Is there any case for making the endowment 'paid-up' and paying the remaining monthly premiums into a S&S ISA? Or am I trying to count the number of angels on the head of a pin now?!

@glitter123

Just checked and I do have the original policy document. Phew!

Meeper · 21 February 2011 at 11:59AM

There is a case for redirecting monthly premiums into an ISA however with the risk factors attached to it. In addition, most ISA providers have a minimum monthly contribution level which may be £100 p/m for the "best" ones.

You are quite right about investing £10k in one go being less efficient as investing monthly, however you are going to have that lump sum at some point, either now or on maturity, so the question won't go away if you do nothing.

You could redirect premiums AND pay monthly into a S&S ISA, perhaps.... Best of both worlds?

saveonarola · 21 February 2011 at 1:03PM

@Meeper

Good point about the lump sum coming at some point.

I wonder, though... Given that the charges on the endowment are front-loaded, wouldn't making it paid-up and redirecting the premiums be settling for the least productive part of the policy?

As it happens, I could probably afford to continue paying the endowment premiums and also pay £100 monthly into a S&S ISA. In fact, I've been thinking of doing exactly that. Would that change your opinion?

Meeper · 21 February 2011 at 1:11PM

Meep.

Hmm.....

It will depend on your individual risk profile and what your objectives are for the money I suppose.

Everything I have said thus far has been generic and non-specific information.

At the point at which we seem to have arrived, you need to lay out some objectives, work out your priorities, set some budgets and do some profiling of your risk tolerances in order to get an idea of the most appropriate way to proceed moving forward.

I would suggest going to see a financial adviser now to discuss all of the above, as I think we're at the point where generic information is not going to be any more use to you.

saveonarola · 21 February 2011 at 1:14PM

@Meeper

Agreed. Thanks for your input. You certainly know your stuff.

Meeper · 21 February 2011 at 1:22PM

Meep Meep!

I do my best!

momist · 6 April 2011 at 3:34PM

saveonarola wrote: »

I have paid off my mortgage and I have no dependents, so I don’t need the term life insurance, although I do attach some value to the fact that others would benefit if I die unexpectedly.

Another thought about this is: Life is change, and at some point in the future changes in your life might make you want to have some term life insurance again. If so, it would cost a whole lot more than this is doing!

What did you decide in the end?

saveonarola · 31 August 2011 at 3:13PM

@momist

Don't know if you'll see this, but just for the record I decided to keep my endowment. It was a very finely balanced decision, but the numbers were marginally in favour of keeping it, and since I didn't need the cash for anything in particular, there was no reason to go against the numbers.

Should I cash in my endowment?

Comments

Categories

Get our FREE Weekly email full of deals & guides - and it’s spam-free