Royal London - With Profits Endowment Plan.

dunstonh

Right, the target figure is 35k, not 70k.

The investment side works by having a guaranteed amount of £10,193.75 plus annual bonuses already paid. That is the minimum amount possible.

What bonuses have already been added?

Daddyto3

My last statement for 2004 (2005 due to be posted to me in March) states;-

POLICY START DATE; 1/6/98
POLICY END DATE; 1/6/2023
BASIC GUARANTEED VALUE £8,750.00
TOTAL PREVIOUS ANNUAL BONUSES; £1,400.00
2004 ANNUAL BONUS £43.75
TOTAL GUARANTEED VALUE £10,193.75

This is the only info i get each year. The policy is only about 3 pages long itself!
the first page is the schedule, which includes policy no, names of lives assured, age next birthday, due date of first premium, term of assurance, sum assured (as above)
Monthly payment premium.

The next couple of pages are t&c's and thats it.

Thanks in advance for all your help.

Phil

dunstonh

Actually yours may not be too bad and your timing could be good. Some of the later Royal London plans moved to a unitised with profits basis with an additional bonus dependent on the underlying unit price. Therefore it wasnt depedendent on legacy issues but when that particular contribution was made.

Starting in 1998, your first real investments would have been around 2000. Just before the crash with the bulk of it going in after the crash. A unit linked plan would have been ideal (there is hindsight for you!).

An amendment to previous posts based on this new information. The guaranteed sum assured is £8750. THe bonus previously paid, plus that year are added to this making £10,193.

Have you had a projection yet and if so, what were the figures on the projection and what rates were used?
Does the policy mention unit or unitised anywhere that you can see. Usually it would appear around the bonus information?

Daddyto3

Hi again.

Spoken to RL and they say it's not unit/unitised it's 'with profits'.
I asked for projection figures, and rates, and commented that I haven't ever had one?, They said I wouldn't have as they only send on request!

Mine is now in the post, will be here in a few days.............Can i let you know then?

Cheers mate.
Phil.

dunstonh

By all means. Post the information as soon as you have it.

Daddyto3

Hi Dunstonh,

Well have received the letter this am, so have typed in word for word, it's very long and boring (well to me anyway), hope you can make some sense of it? It could be written in arabic for me, and i still wouldn't have a clue! :rolleyes:

Anyway heres goes;

Life assured; xxxxxx & xxxxxx
Policy no; xxxxxxxxx

Thank you for your recent communication. Pls find enclosed your illustrations of benefits at maturity as requested. The calculations assume that premiums are paid to date.

Please note the values quoted are not guaranteed and can go up and down. It is possible, therefore, that you may receive an amount lower to those quoted in the enclosed illustration figures. It is important you read all enclosed infromation.

ILLUSTRATION OF BENEFITS AT MATURITY DATE

Endowment sum assured; £8,750

Projected maturity value; LOWER; £14,100
MIDDLE; £17,800
HIGH; £22,700

Explanation of Projections;

Theses figures are only examples and are not guaranteed – they are not minimum or maximum amounts. What you will get back depends on how your investment grows and on the tax treatment of the investment.
You could get back more or less than this.
It is possible the the return will be below the lowest growth reate illustrated.
All firms use the same rates of growth for projections but their charges vary.
The higher illustrations represents a furture rate of returnn of 8% per annum, the middle illustration represents a future rate of return of 6% per annum, and the lower illustration represents a future rate of return of 4% per annum.
The figure quoted allows for both types of bonus described below.

BONUSES:
Your premuims rae invested in the RL Ordinary Long-term fund. Annual bonuses will be added to your plan at the descetion of the Directors on receiving Actuarial advice. Once a bonus is added it cannot be taken away. Future bonuses are not guaranteed. In addition, a final bonus may be added when the benfits of your policy become payable either at death or maturity.
Any final bonus is not guaranteed until the date either type of claim is paid.


Any words of wisdom, always gratefully received :T Thanks in advance,
PHIL

dunstonh

Eek. 35k target and the projections use 4, 6 & 8% and the 8% figure doesn't even come close.

I would have said 4% is the one to work on as well. Can you just double double check that the main sum assured/target is £35,000?

Daddyto3

Well I am really confused now! (after speaking to RL again)

Apparently the initial £35k policy is the pay out for death(!)

But the sum assured (quoted above) of £8,750 is what we are likely to get back (going on todays figures) if we both survive.

Apparently they are 2 different amounts because we will only obviously get one or the other. The letter I received today (see above) was for payout on Maturity only.

Cheers
pHIl

Daddyto3

Now I have got all the info I need, I still don't know whether to keep or sell?

Any advice please???

Cheers

dunstonh

Remember what we say here is not advice. Its discussion points for you to consider in making up your own mind.

The £35k is the target amount. Even at 8% a year, it will come in at £22,700. I would have used the 4% figure as a more likely result and that comes in at £14,100.

I have to say that based on what you have said, this has to be one of the worst endowments I have seen. It must have a massive and unrealistic target growth rate and I really cannot see it coming good.

On that basis, you should review your options and consider getting out now.