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Endowment Maturity Value
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# 1
Victor_Delta
Old 27-02-2007, 9:04 PM
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Default Endowment Maturity Value

I wonder if anyone can throw any light on the following please - I'm inclined to say "I don't believe it"!

My oldest endowment policy, which was started with the Equitable in 1975, matures in 2 months time. For the last few years I have received 'green' (as opposed to amber and red) letters about it - the most recent being sent at the end of September 2006.

It includes the wording: "We are pleased to confirm that your policy is currently on track to repay the target amount of 15,217... and what your policy may provide at maturity on 5 May 2007 - projected final amount assuming investments grow at 3% 21,900, 4% 22,100, 5% 22,300. I was not unhappy with this believing that even if there was no growth in investments between September and May, I would receive in the order of 21,300.

Imagine my surprise to receive a letter from the Equitable today claiming that the guaranteed value of the policy is only 12,383 and indicating that this is approximately what I will receive in May.

Thinking there must have been some sort of miscalculation, I phoned them today but was assured this is correct. When I asked about the figures in the recent 'green' letter I was basically told that these letter are just a regulatory requirement and provide no real indication of maturity value. I found this hard to accept but the operator even checked she was correct with her boss who confirmed the situation saying the value of units can go down as well as up. There was no mention of exit penalties or any other logical explanation.

Well of course I am aware that the Equitable has had financial problems and that units can go down as well as up, but had assumed, given the very clear wording, that these issues had been factored into the calculations given in the 'green' letters over the years - especially the last one. And after 32 years, I can't believe the value has dropped so much just in the last few months.

I don't know if others have had the same experience but can anyone explain what is going on here. Are the figures given in these regulatory letters really so meaningless?

Despite the operator's assurances, I still can't help thinking there must be some mistake here surely?

V
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# 2
maninthestreet
Old 27-02-2007, 10:41 PM
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I hope there is a mistake here - if there isn't, all the people with endowment policies receiving 'green' letters from their endowment providers, like you, will be in for a shock when their endowments mature. Is this a 'With Profits' policy? What did the last endowment statement show as total amount of bonuses added to the policy, and what was shown as the total of the guaranteed amount plus all bonuses
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# 3
vinno65
Old 27-02-2007, 10:57 PM
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Dunston,

any thoughts??

regards Vinno
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# 4
Victor_Delta
Old 27-02-2007, 11:11 PM
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Quote:
Originally Posted by maninthestreet
I hope there is a mistake here - if there isn't, all the people with endowment policies receiving 'green' letters from their endowment providers, like you, will be in for a shock when their endowments mature. Is this a 'With Profits' policy? What did the last endowment statement show as total amount of bonuses added to the policy, and what was shown as the total of the guaranteed amount plus all bonuses
Yes it is 'with profits'. Just dug out my 2005 statement, sent last June.
Sum assured eligible for bonus 4730
Guaranteed bonuses 7653
Guaranteed value at maturity 12383

No mention of final/terminal bonus - the reason I've hung on to the bitter end!

Also these figures don't really square with the regulatory letter, or do they?

V
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# 5
maninthestreet
Old 27-02-2007, 11:18 PM
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£12,383 is the minimum amount the policy is guaranteed to payout. On top of that will (hopefully!) be a terminal bonus, which is some percentage of the total bonuses already added. Does anyone know what percentage was paid last year as terminal bonus by Equitable?
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# 6
dunstonh
Old 27-02-2007, 11:39 PM
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The figures are being misread. The final bonus paid on top of the guaranteed amount. I would expect between 21,300 and 21,900.

That is of course if the downturn in the markets doesnt continue over the next week or two. If it does, then the final bonus may get reduced. Indeed, it may be very sensible to enquire about the surrender penalty now. A bird in the hand.....
I am a Financial Adviser. Comments are for discussion purposes only. They are not financial advice. Different people have different needs and what is right for one person may not be for another. If you feel an area discussed may be relevant to you, then please seek advice from a Financial Adviser local to you.
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# 7
Victor_Delta
Old 28-02-2007, 8:54 PM
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Thanks dunstonh!

As it happens before I could ring them this morning, the Equitable phoned me (I had asked them to register my 'complaint' at the end of yesterday's call). Or perhaps someone at the Equitable had seen this thread last night...?

The girl who called me confirmed, thank goodness, that I had been incorrectly advised yesterday and that whilst she would not be drawn on precise figures etc and gave all the usual caveats, nevertheless the amount I will receive in May should be nearer to 22k than 12k. She also agreed with me that they have a training issue (especially as the person I spoke to yesterday had even checked what she was telling me with her "boss").

Anyway, I'm much relieved as you can imagine.

Looking at the wording of the letter I recently received however, I simply can't believe that most recipients don't react in exactly the same way as I did - which is not good for the blood pressure. However, perhaps given their recent history, the Equitable doesn't have many clients these days with 'with profits' endowment policies that actually reach maturity?

Thanks to all who responded.

V
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