Standard life endowment - to sell or not to sell?

princessposh

Hi i'm new to this forum and think i may have posted this twice!!... but can anyone help have 3 SL endowments. Details as follows

Endowment 1 start date nov 86 . matures nov 2011
Guaranteed sum assured - 12.814
Declared bonuses- £ 10983 (11/07)
Surrender value - £24050
Monthly premium - £51.07
Maturity forecasts - £28300 ( 3.5%) £29.900 ( 5.5%) £31600 7.25%)
Tried TEP market but didn't make an offer!

Endowment 2 start oct 90 - matures oct 2012
Guaranteed sum assured - £7.200
Declared bonuses -£3.685
Surrender value -£9871
Monthly premium - £32.52
Maturity forecasts - £ 12.600 ( 3.75%) £13500 ( 5.5%) £14.400 ( 7.25%)
TEP - no offers!

Endowment 3 start Nov 94 - matures Nov 2019 Homeplan life with profits
Guaranteed sum assured -
Declared bonuses - not declared
Surrender value £10368
Monthly premium -52.15
Maturity forecasts - £18K ( low) £21.200 (med) £25.100 (high)

Ive got a One account mortgage via RBS for £75K - currently owe 65K interest rate 6.6%. Am i better off cashing in one,two or all policies and using to pay off mortgage?. Also is there any tax to pay on surrendering policies?. I've got a SL promise on Endowments 2 & 3 but SL not obliged to honour promise!
Any advice gratefully accepted
Princessposh

Dick_here

My instinct would be to keep the first two and surrender the final one. You've still got eleven long years to go on that one, I'd take the 10k available now and put the £50pm to better use.

The first two are maturing soon enough so their values shouldn't drop significantly.

Gorgeous_George

I canned my SL policy this month - just 18 months before maturity (my thread). It was similar to your 1st policy.

My reasoning was that SL announce interim results next month and I am not confident that profits will be good. With 18 monts to go, any falls in policy value will be difficult to recover. My surrender value was £26.5K which, at the moment, is sat in my e-savings account but will soon be transferred to my offset mortgage account where it will 'earn' 5.74% tax-free (equivalent to 7.18% for a basic rate taxpayer like me).

I think cashing in and reducing the mortgage by £44K ish would be a good move.

Assuming you owe that £65K over 20 years, payments will be £488.46 at the moment, you could:

• pay £44K off your mortgage
• add endowment payments (£135.74) to mortgage payment (and pay £624.20 per month)
• be mortgage free in 3 years and 2 months

GG

princessposh

Hi
Thanks for the valuable advice!
I've tried to sell both endowments via TEP - only Surrenderlink offered on one ( 25yr one) and offered £450 more than SL. Thought it would be more. No- one would offer on 22yr policy!.
Has anyone used Surrenderlink? Also tried AAP - didn't offer on either. Any good advice on when's the best time to use TEP. Have a feeling SL announce bonuses Nov in which case am i best to wait until then?

definetely going to surrender Homeplan via SL

Many thanks

chaickenfan

I'm using Surenda-link to sell my policy at the moment. They seem pretty professional so far. It does take 4-6 weeks for the paperwork to go through (and there's tons of it!).

They offered £38,000 for my Friends Provident policy (formerly London and Manchester) which was £1800 above the surrender value and £1300 more tham anyone else offered. Do they know something we don't :question:

EdInvestor

princessposh wrote: »

Endowment 1
Maturity forecasts - £28300 ( 3.5%) £29.900 ( 5.5%) £31600 7.25%)

If you cash this one in and use the lump sum to reduce the mortgage also adding premiums to mortgage payment until maturity, you will end up with 31,162, which almost beats their top forecast which they have no hope of meeting - you will be lucky if you get a 5% return from SL WP going forward.

Endowment 2
Maturity forecasts - £ 12.600 ( 3.75%) £13500 ( 5.5%) £14.400 ( 7.25%)

The same procedure with this one will produce a return of 14,556 which actually beats their top projection.

Endowment 3
Maturity forecasts - £18K ( low) £21.200 (med) £25.100 (high)

With this one, the return would be 28,405, so this is candidate no 1 for the bin.

With mortgage interest rates at these levels there are very few people who should take the risk of holding onto endowments when the likelihood is they will get a better return with no risk at all by cashing in and reducing their mortgage.

dunstonh

which almost beats their top forecast which they have no hope of meeting - you will be lucky if you get a 5% return from SL WP going forward.

Although Ed says they have no hope of meeting the top projection figure, it is worth noting that they have been exceeding that figure.

princessposh

now i'm confused!
Do the SL forecasts include terminal bonus's?. Apparently SL TB's are on the up? ( 19% for 22yr polcies & 28% 25yr polices)...am i right?I

f not then i'm inclined to surrender all of them......otherwise i was considering holding onto the 25yr one.

In anticipation......

dunstonh

Problem is that no-one knows. What has gone before means nothing and what comes ahead is unknown.

SL endowments also often include a mortgage promise value. That has been seen as high as £10k. Its worth finding that out as its only paid on maturity.

The decision to surrender could still be the right one. Just not enough info here yet.

EdInvestor

There has been no premium for taking a risk in Standard life endowments for several years. Maturity values have been on a declining trend as well. And now interest rates are in the 6-7% range, there is little point in bothering with them as even if they perform well, they are likely to fail to beat the guaranteed return you get from repaying the mortgage.

dunstonh

There has been no premium for taking a risk in Standard life endowments for several years.

I am sure all those that have seen increasing projections would disagree. GG's own thread show how much it was performing above the projections.

Maturity values have been on a declining trend as well.

Only when you misread the data.