Standard Life Endowment Policy - Should I Keep or Sell - Help Appreciated Please

irvine

Hi, can anyone offer me advice please. I've finally managed to get figures from Standard Life on my policy and wonder if i should keep or get rid of it.

Start Date: 22.07.88
Maturity Date: 22.07.13
Bonus already applied: £6436.13
Last declared bonus: £54.88
Monthly Payments: £37.19
Surrender Value at 26.09.08: £14404.20
Maturity Value @ 3.75% p.a: £17,700
@ 5.50% p.a: £19,100
@ 7.25% p.a: £20,600
Mortgage Endowment Promise: They say "it is not possible to determine the amount of any topup payable until plan has matured". Apparently due to demutualisation and terms and conditions set and approved by Court of Session in June 2006. None of it makes any sense to me

I'd be grateful if someone who understands about these things could help.

(Oh and we could not go down the mis sold policy route, I believe the reason being that our "financial advisor" was actually the solicitor who was acting for us when we bought out property in 1988 although this was never confirmed.)

I should also mention that we changed our mortgage 5 years ago to a repayment (after getting the letter telling us we were going to have a large shortfall) and have now paid it off so the endowment is now just a "savings policy".

Sorry if i have rambled on a bit

doingwhatican

We had a very similair product to you with Standard life. Ours was a sum assured of £14400 with a bonus of £7400 already applied. Our policy was due to mature in May 2014.
We got a surrender figure of £18500 back at the end of July and we sold it on for £21700 in August. We have not long banked the cheque and paid off the mortgage. We too changed out mortgage to repayment about 7 years ago so the mortgage had already shrunk considerably.

EdInvestor

irvine wrote: »

Maturity Value @ 3.75% p.a: £17,700
@ 5.50% p.a: £19,100
@ 7.25% p.a: £20,600

If you cashed in this policy and then put it on deposit at a net return of 5% also paying in the premiums to maturity, you would end up with a return of 20,903.

Since this is higher than their best projection but involves no risk, there wouldn't seem to be much point in continuing with this policy.

dunstonh

SL have been exceeding the 7.25% illustration example although that means nothing for the future as that is unknown.

Obviously the cost of life cover is built into the SL plan so you need to consider if that is needed or not (if so, it would reduce Eds figures a fair bit).

Also, the mortgage promise values are known. They are given in a range based on the lower/higher illustration figures. They printed on the docs IFAs get (SL update IFAs with individual policy data periodically so we can see how they are doing). Plus the information is available on demand and other posters have managed to get figures. These figures are important and often the decision to keep or sell will come down to the size of the mortgage promise value. Some of which have been in excess of £10,000. That is lost on surrender so it must be known to make any informed decision.

EdInvestor

dunstonh wrote: »

SL have been exceeding the 7.25% illustration example although that means nothing for the future as that is unknown.

Not lately it hasn't given the falls in the markets - terminal bonuses were cut 10% only a couple of months ago.

Obviously the cost of life cover is built into the SL plan so you need to consider if that is needed or not (if so, it would reduce Eds figures a fair bit).

More likely by very little, cost of life cover is much cheaper these days all else being equal.

Also, the mortgage promise values are known.

Well they used to be - and many posters have been given them on asking. But the mortgage promise was never guaranteed, and is based upon a 6% overall return year after year..How likely is that now on a policy maturing in 5 years? Not very.

dunstonh

Not lately it hasn't given the falls in the markets - terminal bonuses were cut 10% only a couple of months ago.

You know full well the market values fluctuate. SL have factored the recent drop into the terminal bonus but monthly payments now are buying cheaper. However, even if you average in the tech stocks crash which had a worse impact on the stockmarkets than current events, they have still managed to average more than 7%.

More likely by very little, cost of life cover is much cheaper these days all else being equal.

monthly payment is £37. Minimum premium on a replacement is going to be around £6. We dont know the health of the policyholders. £37 may be cheap for the life assurance.

Well they used to be - and many posters have been given them on asking. But the mortgage promise was never guaranteed, and is based upon a 6% overall return year after year..How likely is that now on a policy maturing in 5 years? Not very.

Very likely as its 6% before charges and they have been exceeding 7% after charges. However, the promise value will still pay out even if say the lower projection rate was achieved. This is why they issue the promise value range. Nothing has changed on that as the monthly updates on policies to IFAs are still showing mortgage promise values at lower, medium and higher projection rates.

irvine

EdInvestor - And I would also be saving the monthly payments. Cheers.

irvine

Dunstonh - thanks for info. And I will try again to get Mortgage Promise Value from SL.