Friends Provident Endowment Assurance Policy

4Moneysaver

This isn't a mortgage it's a simple 15 year policy which I took out as a way to save money long-term.

provider Friends Provident
Guaranteed sum assured at 2007 the guaranteed sum was £6,300
declared bonuses at 2007 £793.41
Surrender value on enquiry in July 2008 £5475.70
Monthly premium £40
Maturity dtae 23/10/2012
maturity forecasts at a growth rate of 4% = £8370 and at a growth rate of 8% = £9630

However I have about £6000 of debt that I want to get rid of. Should I sell up, clear what I can and then start saving again? And Friends Provident have sent me a list of companies that might be interested in buying the policy, are there any I should be wary of?

Sorry to post again, it's just my question got superceded by lots of others and I really value the advice I get here.

Thanks.

EdInvestor

What interest rate are you paying on the debt?

4Moneysaver

There are three elements to the debt:
£2531.11 at 5.83%
£1876.32 at 15.76%
£545 at 24.95%

judy2357

We cashed in our FP Endowment a couple of years ago and paid a chunk off our mortgage, not sure this was the right thing to do, think we should have paid off our credit card but in your case would think paying off your debts would be a good idea.

EdInvestor

4Moneysaver wrote: »

maturity forecasts at a growth rate of 4% = £8370 and at a growth rate of 8% = £9630

I've used a notional rate of 10% for the debt.

So if you surrendered the policy and used the lump sum to pay off the debt and then used the now spare premium money to pay it off as well, at maturity you would have had a return of 10,363, which easily beats the top FP forecast which they are unlikely to meet anyway.

Undoubtedly you would be better to cash in and pay off the debt than continue with this policy.If you need to replace the life cover, do it before you cash in.