Unit Linked Endowment - Re-assurance????

DAVEYROBBO

payless wrote: »

I doubt that the 11% goes towards life cover- thats normally a seprate charge over and above!

So lets get this straight I pay £66.06/month, according to my yearly statement there is a discrepancy between the premium and the monthly allocation amount £63.43 of £2.63. Is this possibly the Life Aspect I was 22 when I took it out in 1990 with 25 years to run. Seems a little low to be that but???

Of the £63.43 Monthly Allocation Amount £6.98 goes in charges (11%)leaving £56.45 to be invested.

Perhaps this is why I work in an Oil Refinery and not in a financial institution:o

payless

That could well be it ( life cover costs when in-built are not usually massive, esp as only covers difference between sum assured and fund value ) , or it might be yet another charge, with the life cover ( which would normally vary ) being a separate charge ( unit cancellation)

dunstonh

What!!! I am also liable to CGT when the endowment was to mature?

No you are not. Ed gets confused with life fund taxation and chooses to ignroe the numurous times she has been correct on that front.

If the 11% is still being taken then it is expensive. If it ceased to be taken after a certain time in the policy life (which is more common) then it may be a different option.

EdInvestor

It is not a question of CGT when the endowment matures.In a life fund (whether endowment or bond) the income and capital gains on the investments are subject to life insurance company corporation tax of 20% every year.

This tax is not charged on investments held within an ISA. Endowments became obsolete when ISAs were introduced for this reason. Of course nobody in the industry would bother to tell you that, as they all get paid trail commission on these old policies, which ceases when they are surrendered...

dunstonh

In a life fund (whether endowment or bond) the income and capital gains on the investments are subject to life insurance company corporation tax of 20% every year.

Which is incorrect. In fact to be honest, its not an error. Its blatent lies given the number of times that Ed has been corrected on this. The last occassion was a week ago and has come up frequently over the last 2 years.

Of course nobody in the industry would bother to tell you that, as they all get paid trail commission on these old policies, which ceases when they are surrendered...

Again, factually incorrect. Life funds do not pay trail. Ironically, the unit trust funds held in an ISA do. So, if you want to use commission bias as an excuse, then the earnings potential is greater in an ISA than an endowment.

DAVEYROBBO

Contacted Guardian this morning to get some answers
The Fund invested in is GRMA and performance figures can be obtained on link below:

http://funds.ft.com/funds/guardian/Insurance/GRMA/summary

The life cover element of the policy is the £2.63 per month and the unit allocation per month is the £63.43. The charges/fees that they take are raised by the difference in the Offer/Bid price currently £13.00 - £12.35 = 65p per unit therefore charges are 5%.

They are sending me a surrender value (I didn't ask for one) and some performance data for the fund and other alternatives available for me to transfer into.

Presumably then as the original paperwork stated 11% for the rest of life as fees then their is a possibility that these have reduced down to 5%, still high I realise. Alternatively it could be said that the 5% plus the life cover element add up to the 11%???

I will continue my review of the fund and see what they come back to me with.

Any views on my situation now, Please!

dunstonh

Those charges are still high. Often plans wipe out the bid/offer spread later in to the term. Yours has just reduced from a very very high figure to a very high figure. Not ideal.

If you dont need the life cover, then its looking like this could be knocked on the head.

payless

of course I've seen contracts where if cancelled early there are extra charges applied

dunstonh

in post #4 DR said there no surrender penalty. However, for others reading, it is a vital piece of information that you need to know before you make any decisions.

DAVEYROBBO

This morning I received some info from GFS namely this:

Current Cas in Value £17535 (no surrender charges).
Illustrated Maturity Value £27300 @4% £34600 @8%.
The original fund projection was for £44950.

as quoted before:
The life cover element of the policy is the £2.63 per month and the unit allocation per month is the £63.43. The charges/fees that they take are raised by the difference in the Offer/Bid price currently £13.00 - £12.35 = 65p per unit therefore charges are 5%.

Performance wise the fund at 31.05.08 performance was as such:

1 month 6 months 1 year 3 years 5 years 10 years Overall since 02.79
-4.96% -4.75% -5.43% +25.4% +55.3% +27.6% 9.26% p.a

The comparison data that they have supplied me with wrt their own funds shows it to be an upper mid range performer over the last 5 yrs and lower mid over the last 10yrs. It is their largest and perhaps lowest risk fund.
In comparison with other fund providers using Lipper Hindsight its quartile rating for 1,3, & 5 yrs is 2 & 10 yrs is 3.

I now obviously need to make a decision as regards as to what to do with this investment and as such any advice would be most welcome.

Regards
Davey Robbo