Endowment Help Please!

Jules123_2

I have a Prudential Endowment which is due to mature in August 2009. It was taken out on a mortgage of £17,500. I called Prudential a few days ago and asked them the surrender value of the policy.

Guaranteed sum assured: £6,825.00
Declared bonuses: £7,272.90
Surrender value: £15,335.90
Monthly premium: £30.75
Maturity date: 8/1/2009

I called a reseller for endowments and they gave me a surrender value of £16,123.00. I do not have a mortgage attached to this policy, as I paid the house off 7 years ago. Is it worth keeping the policy?

Any advice would be greatly appreciated.

dunstonh

Many of the Pru endowments have gone into green (target or surplus projected) this year. They are certainly one of the better providers and the fact someone is willing to pay you more for it indicates a lot about the belief they have in the provider.

EdInvestor

Hi Jules


If you surrendered and paid the proceeds into the bank @4% also paying in the premiums you should end up with 18,436, quite a bit more than the guaranteed value of 14,097.

However as DH says,the Pru is one of the better lifecos and may be able to pay a terminal bonus, which is probably why you got an offer from the TEP trader.

Have you got a set of Pru projections @4%,6%,8% you could post to compare so we can see how much this (unguaranteed) TB might be?

Jules123_2

Thank you for the replies.

The Prudential figures are as follows:
Assumed future rates of investment return @ 4% a year 17,600.00, @ 8% a year 20,800.00

Sorry, I don’t see anything in the letter they sent about Terminal Bonus.

dunstonh

Not a bad policy at all. At 4% it would provide a surplus and with Pru 6% is certainly what you would consider Pru capable of long term. £19,200 would be a sensible projection of what it could come out at.

I would keep this one if it was mine.

EdInvestor

So we have the following options:

Without risk:

1.Guaranteed value 14,097
2.Surrender and save @4% : 18,436
3.Sell and save @4%: 19,322

With risk:
4.Stay: Realistic projection @6% :19,200


Looks like no 3 is the winner to me, unless you need the life cover and would have to pay a lot to replace it.