Should I Keep My Endowments Going?

blackswan2

or rather, to be more general about it:

Should one keep one's endowments going or cash them in?

I don't have a mortgage at the moment, but have three endowment policies from the late-80s/early-90s. Now I know they have performed woefully, but I am where I am. Is it worth carrying on paying into them or is it best to cash them in (or sell on secondary market)?

I understand that some policies you can sell on for more than their cash-in value - if someone has assessed them and thingks they're worth buying then surely they're worth continuing if you don't need the money yet. On the other hand if the only option is to cash them in, then does that mean that you should because no-one else thinks they;re worth perservering with?

whu

Hi - In order to get a considered response I would suggest that you provide more details - premiums/values etc/term

Sailor_Sam

I moved last year, and the mortgage was paid off, but the endowment has got a little over two years to go. So i decided to carry on paying it, i know it's low at the moment, but thought maybe in two yrs the final bonus will be better. I expect it to be between £4 - £5k

blackswan2

1. Phoenix (formerly Sun Alliance) -

start: 1990 mature: 2014 monthly premium: £51

Guaranteed basic sum assured: £13k
Bonuses to Dec 2007: £5.2k (2007 bonus was £18!)
SUM+BONUS = £18.2k
Target = £37k
Projected (Jan 2009) final amount at 3.75% each year = £19.4k
16/01/2009 SURRENDER VALUE = £13,800

2. Legal & General

start: 1988 mature: 2013 monthly premium: £32

Guaranteed basic sum assured: £7.5k
Bonuses to Dec 2007: £5.4k (2007 bonus was £160)
SUM+BONUSES = £12.9k
Target = £24k
Projected (Jan 2008) final amount at 4% each year = £20k
"Current final bonus rate 108%"
15/01/2009 SURRENDER VALUE = £13,200

3. Legal & General

start: 1988 mature: 2011 monthly premium: £31

Guaranteed basic sum assured: £7k
Bonuses to Dec 2007: £4.7k (2007 bonus was £140)
SUM+BONUSES = £11.7k
Target = £20k
Projected (Jan 2009) final amount at 4% each year = £15.1k
"Current final bonus rate 108%"
15/01/09 SURRENDER VALUE = £13,400

EdInvestor

Post some info about them

Provider
Guaranteed sum assured
Declared bonuses
Surrender value
Monthly premium
Maturity date
maturity forecasts
Interest rate payable on mortgage

Edit : I see you've just posted some of the info, please fill in the gaps and give updated surrender values and projections.

blackswan2

EdInvestor wrote: »

Post some info about them

Provider
Guaranteed sum assured
Declared bonuses
Surrender value
Monthly premium
Maturity date
maturity forecasts
Interest rate payable on mortgage

Edit : I see you've just posted some of the info, please fill in the gaps and give updated surrender values and projections.

Done! We're renting at the moment so don't have a mortgage.

I thought it would be cheeky be specific, so was interested in a steer although I guess it must vary a lot, thanks for any comments that are forthcoming.

EdInvestor

Will have to wait for the S/Vs to do any meaningful calculations.

What will you do with the money if you cash in?Save or invest it? If you are not sure I will use 5% net of tax/charges as a suitable comparison return.

andymossy

To be honest you might as well check out and see if any of the market makers will make you an offer for it. It's free anyway so why not?
You will to let them know your S/V though.
You can go to APMM (Association of Policy Market Makers) or just apply online to www.aap.co.uk

blackswan2

I've got the L&G surrender values now which I've added in red.

EdInvestor

If you cashed in the first L&G policy and put it on deposit at a return of 3% net of tax to maturity, also paying in the premoiums, your return at maturity would be 16,489.

Projected (Jan 2008) final amount at 4% each year = £20k

You need to update this projection to see how it compares.


Doing the same thing with the second L&G policy, you would end up with 14,983, compared with your old projection of 17k.

Sorry can't offer a suggestion as to the way forward.

blackswan2

Thanks Ed, that is great.
I have updated the second L&G with the current downwardly revised figure, I have also added details for the Phoenix policy including its SV.