Endowments in General

Keentosave_3

I have read the recent posts with interest.
To date, my assumption has been that it was always better to keep any policies due to finish in the next 3-7 years. I thought there was a slight advantage to keeping rather than surrendering in particular because of the 'Terminal Bonus'. Now that Standard Life are not giving any Terminal Bonus on maturing policies, I wonder if things have changed and we should all cash in our existing policies! Do Standard Life want that? Is ther any incentive/advantage to keeping such policies.

Any thoughts or comments of interest.

For info, I have 2 SL WP Endowments - not linked to any mortgage:

35K matures 2013 @ £49.65 pcm (sum assured £12,635, surrender value now £18,351, guarunteed minimum on maturity £22,058)

20K matures 2014 @ £29 pcm (sum assured £7,220, surrender value now £8,646, garunteed minimum £11,543)

No real interest from 3rd party seling on. I din't want to risk anything. No luck with mis-selling claim. I am debt free, mortgage free and intend using any money for childrens university. Could put the money in tax free savings for 2-4 years?

Keentosave

EdInvestor

Please post updated maturity projections.

Keentosave_3

35K
3.75% = £22,700
5.5% = £24,300
7.25% = 26,000

20K
3.75% = £11,900
5.5% = £13,000
7.25% = £14,300

Both are Minimum Cost Plan (68)

Keentosave

foreversummer

Keentosave wrote: »

Now that Standard Life are not giving any Terminal Bonus on maturing policies, I wonder if things have changed and we should all cash in our existing policies!

I thought they have been cut, but gone altogether - are you sure?

Foreversummer

Keentosave_3

SL told me when I rang for the surrender value that they are not crrently paying terminal bonuses - so I have to assume that my policcy may / will not have one.

EdInvestor

Keentosave wrote: »

35K
3.75% = £22,700
5.5% = £24,300
7.25% = 26,000

If you cashed in this endowment and saved it at a net return of 5% to maturity, also paying in the premiums, your total return would be 26,826. Beats all their forecasts and there's no risk.

20K
3.75% = £11,900
5.5% = £13,000
7.25% = £14,300

Doing the same with this one, your total return would be 14,017.

Basically there's no risk premium left in these policies even at today's low interest rates.

Keentosave_3

Thanks,
on talking to SL again today - the operator today said there is a terminal bonus on maturing policies! - just not on surrendered policies. Terminal bonus currently 20.7% of the gaurunteed minmum (was 24.3% earlier in year).

My poor maths still makes me think cash in and save - at 5% should cover any terminal bonus .......I think! as long as I invest the saved premiums and the terminal bonus doesn't go up (which I for one doubt)

EdInvestor

Keentosave wrote: »

Thanks,
on talking to SL again today - the operator today said there is a terminal bonus on maturing policies! - just not on surrendered policies.

I'd have thought this is wrong. All surrender values contain accumulated terminal bonus. At present there is an MVR penalty imposed on early surrenders, but this would not wipe out the TB on each and every policy.

Sounds like the call centre worker didn't really have much of a clue.

Keentosave_3

I'll have to get back to them.
But, I'm sure they were saying Early Surrender value includes the annual bonuses to date but NOT a Terminal Bonus. The Terminal Bonus is now only being paid to maturing policies. No penalty fee / MVR for early surrender.

Given that I know the surrender value today and the minimum on maturity with or without Terminal Bonus, I,m still inclined to cash in and tie it in high interest.

I think!

turbobob

This suggests final bonus rates cut rather than wiped out across the board - http://ukgroup.standardlife.com/content/news/new_articles/2008/bonus_announcement_08.xml

Maybe I'm not looking hard enough but I can't see the final bonus rates in their bonus declaration.. http://www.standardlife.co.uk/content/pdf/slac/wp1.pdf

turbobob

Keentosave wrote: »

I'll have to get back to them.
But, I'm sure they were saying Early Surrender value includes the annual bonuses to date but NOT a Terminal Bonus. The Terminal Bonus is now only being paid to maturing policies. No penalty fee / MVR for early surrender.

Given that I know the surrender value today and the minimum on maturity with or without Terminal Bonus, I,m still inclined to cash in and tie it in high interest.

I think!

Best look at it in terms of how much you've paid over the term, and how much they are going to pay you, rather than worry about what percentage is terminal bonus or whatever.