CGNU With Profits Endowment

lolly1963

Hi,
We are not sure what to do and wondered what the experts on here might think and would welcome your views.
Low Start Endowment for first 5 years.Premiums started around £60 and rose to £124
20 year policy matures September 2011.
Mortgage now paid off so is used as life and savings policy(Joint lifes).
Monthly Payments of £124
2007 Yearly statement received 13th October 08 is:
Value on death £50,000
Sum assured £18950 Total Regular Bonus £8,851.04
Surrender Value as of yesterday 13/11/08 is:
£28,938.95 (although not guaranteed)
4% 6% 8%
£40,300 £42,700 £45,200

This policy is eligible for £2,800 payment under the 'promise' and also the 3 payments and one off payment re the reattribution fund aswell (if it goes ahead to plan of course!)
Our gut instict is to keep it, but still not sure and would appreciate any comments to help us decide.
Many Thanks
Lorraine.

lolly1963

Hi,

Forgot to add that at the moment NU are paying 19% on final bonus on sum assured and attatching bonus but obviously that could change by the time this policy matures with the current market conditions.
Many Thanks
Lorraine

Tom_Kelly

I don't expect that you will get many replies as this falls under the heading of investment advice. No-one can give you this without finding out a lot more about your your personal circumstances. It really is a much bigger question than you realise. I suggest that you see an IFA for advice.

payless

Oh I know that a certain someone usually is willing to comment

lolly1963

Hi,
No, its not advice i was looking for. It was a view of the experts on here.
As i said, at the moment it is purely a savings vehicle, and obviously just wanted some opinions and not professional advice.
I think DH wants to keep paying the premiums to maturity, but just wanted somebody elses views as they have a lot more knowledge and dealings with these products.
Tahnks again,
Lorraine.

Tom_Kelly

ok
As an investment the plan is not good value due to the charging structure and asset allocation. However, it doesn't have the volitlity that a more equity based plan will have. The life cover you are paying for is effectively the diffeence between the current value and the sum assured which is around £21,000 according to the figures you give. The cost of this (charged internally) will be higher than buying it seperately but the low differential is not worth worrying about. Is it worth keeping? It depends upon the projected terminal bonus which may be lost if you stop paying the premiums. If the terminal bonus is not that great then making it paid up (stop premiums but leave to maturity) is a possible option. If the projected terminal bonus is a lot greater than the premiums to be paid over the next two years then it is worth keeping them going. Lots more ifs and buts if you need specifics but an IFA is needed to investigate the facts before they could advise.

lolly1963

Hi,
Thanks for your opinion, i do appreciate it.
We have another £3300 to pay into the plan if we keep it going, and i did work out that at the worse way, we would get all of the money pad back in premiums at maturity, although i realise that if we had invested it differently over the last 20 years, then maybe the return would be greater overall.
If the 19% terminal bonus still applied at maturity, then i think it would be good to keep, however, maybe we will seek some expert advice before making any decision.
Because it is no longer used against a mortgage, it is hard to decide because we can afford the premiums each month, but again, dont want to throw away good money if not necessary.
We have been holding on i suppose because of this re attribution, but at the speed thats moving who knows.
Thanks again
Lorraine

lolly1963

Hi,
Was now thinking if we surrendered the policy now, and kept paying in the premiums of £124 until Septemeber 2011 (which is when it would have matured) then at least we would know what would be in the pot. Again, it is just being used as a means of savings as mortgage now paid off.
I have figures and bits of paper all over the house...LOL! I think it would return around £36 to £37k if u could achieve perhaps 5% interest overall adding the premiums to the final payout year on year(maybe a bit optimistic though). I have trawled the net trying to understand these with profit edowments and all i can assume is that there may or may not be any final bonus at maturity which doesnt help us much.

What i want to know is how much do you think advice for this policy would cost for a good independent financial adviser?

Thanks again,
Lorraine.

dunstonh

think it would return around £36 to £37k if u could achieve perhaps 5% interest overall adding the premiums to the final payout year on year(maybe a bit optimistic though).

Are you getting the 3.x% special bonus for the next three years (thats 3 lots of special bonus)? Is there a mortgage promise value on the policy (check 2001 or 2004 statement - or ask NU)?

all i can assume is that there may or may not be any final bonus at maturity which doesnt help us much.

Factually that is correct. That wording applies to the very worst and the very best that continue to mature in surplus.

lolly1963

Hi Dunstonh,
Thanks for your reply.
Yes, we are getting the 3 special bonus and also a cheque next spring according to NU as of the other day.
Yes, there is a mortgage promise and i checked as well. It is for £2800 for this policy.
It is really hard to know what to do in this current climate and a horrible dilemma for all involved. I just think now is the right time to think about all the pros and cons.
Every year i check on the surrender values and so far they have gone up every year, but the next almost 3 years could be the worst.
Thanks again
Lorraine.

dunstonh

Now is probably the worst time to surrender. Mortgage interest rates are falling. Investments have fallen and MVRs imposed. The time to do it was 12 months ago. The next time could be 12 months or so from now when the MVR has gone and you have had at least one of the special bonus payments and possibly the re-atrribution cheque.