Endowment query

Josepina

My gut feeling is to surrender this endowment but before taking the plunge I thought it best to run it past a few of you in case its going to be the one in a million to become a winner.

Also I heard some companies buy these? Any idea where to start with this and is it worth the hassle?

Lastly is there a good time of year to sell or does it not make any difference.

Provider Standard Life
Guaranteed sum assured Can't see this anywhere on statement
Declared bonuses ?Final Bonus £3302
Surrender value ?value on 22/7/08 £21,852
Monthly premium £130
Maturity date 22/07/2021
Maturity forecasts low rate £46,800, intermediate rate £56,600, high rate £68,500 (target amount was supposed to be £74,000)
(new) est interest rate on mortgage 5.75% fixed for 3 years on £300,000

I'm not too bothered about life cover as £74k isn't going to pay off mortgage and my pension death in service would cover majority

Thanks in advance for help and advice

EdInvestor

You need to ring them up and get a surrender value and update the projections.

You could try for a sale quote here: https://www.apmm.org

Josepina

Ok but those projections are less than 1 month old would they change that much?

EdInvestor

Josepina wrote: »

Ok but those projections are less than 1 month old would they change that much?

They might do - SL has just issues results and may well have cut the terminal bonus amount in the surrender value (which will anyway be lower than the current value on your statement).

Josepina

Surrender value today £21,797

Also been told that I can't sell it as there is no market for this type of endowment - its Unitised with profits for those who understand it.

So surrender?

EdInvestor

Josepina wrote: »

Maturity forecasts low rate £46,800, intermediate rate £56,600, high rate £68,500 (target amount was supposed to be £74,000)

If you surrendered it and used the lump sum to pay down the mortgage, also boosting the mortgage payment by the endowment premium to maturity, your return would be 74,969 [that assumes the interest rate on the loan stays constant throughout].

So no point in holding onto the policy, as this return beats all the projections - and there's virtually no chance the policy will get beyond the middle return anyway.No point in taking a risk for a lower return.

Rather ironic that in order to get an endowment to do what it said on the tin ( pay off target amount, provide extra) you need to surrender it.

Josepina

Thanks thats what I was thinking.
Being persuaded to take endowment type mortgage was the worst decision of my life but I suppose we learn by our mistakes.

Josepina

Ok the decision to sell this policy is now made. My new question is I plan to sell within the next 6 months but with the credit crunch and shares falling etc does it make any difference when I surrender.

Am I better off surrendering now, monitoring weekly or waiting a few months or will there not really be much in it?

Thanks in advance

EdInvestor

Better to start the process now, as values are going down.

dunstonh

EdInvestor wrote: »

Better to start the process now, as values are going down.

Apart from those going up.

EdInvestor

This policy on 22/7/08 was worth £21,852 and dropped by August 14 to 21,797.
Josepina will no doubt be checking what has happened to the surrender value since then, perhaps she will let us know.