Endowment freeze or continue paying?

JackRS

I have 5 endowment policies, all due to finish in 2011, obviously with a predicted shortfall. I’ve heard people say one option would be to freeze them (stop paying the monthly premiums) and allow them to finish with the current level of investment. Apparently if I put the money that I would have paid for the premiums each month (~£180) into a savings account, in the end it could be higher?

Obviously I’d need to ask each company for projections to work it out properly, but I wondered if anyone had considered this and already has an understanding of the issues?

I thought that by freezing the payments you’d loose out on the final bonus thing and therefore potentially miss out?

So any views or experience much appreciated

dunstonh

have 5 endowment policies, all due to finish in 2011, obviously with a predicted shortfall. I’ve heard people say one option would be to freeze them (stop paying the monthly premiums) and allow them to finish with the current level of investment.

Its an option.

Apparently if I put the money that I would have paid for the premiums each month (~£180) into a savings account, in the end it could be higher?

it could also be lower.

Obviously I’d need to ask each company for projections to work it out properly, but I wondered if anyone had considered this and already has an understanding of the issues?

Anybody doing an endowment review should do.

I thought that by freezing the payments you’d loose out on the final bonus thing and therefore potentially miss out?

Yes you do, if its a conventional with profits endowment. However, if the bonus is zero and likely to remain that way, then it can be beneficial to stop throwing money into the plan. Equally, the guaranteed sum assured plus bonuses to date are good and stack up well against the surrender value, you should keep it.

JackRS

Thanks, they are with profits and currently we do have paper work showing bonuses expected, so probably best to keep paying in?