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HSBC Life Endowment - cash in or stick?
BlondeHeadOn
Posts: 2,277 Forumite
We've just received a 'Red Alert' letter from HSBC Life re our joint endowment policy, and we have also (perchance) just paid off a big chunk of our I/O mortgage capital with a different policy that matured. I now can't decide whether to cash in the HSBC Life endowment and just pay off another chunk of the mortgage or not. Details below:
Mortgage = Nationwide tracker, I/O, fully flexible (so can and do pay off chunks off the capital whenever we want, which is why we haven't switched to a repayment). Current monthly payments about to drop to c. £125, so we can now overpay by lots - c. £500 per month.
Original mortgage = £69,000
Remaining mortgage = £37,257 (by lots of little over-payments and a couple of big ones)
Our aim is to pay off this mortgage by over-payments every month, so no intention to keep the HSBC Life endowment as a link to the mortgage.
HSBC Endowmnet policy:
Start Date = 28/02/1997
Maturity Date = 28/02/2021
Monthly premium = £188.83 (this includes joint life and critical illness cover*)
Target amount = £69,000 (hollow laughter!)
Projected final amounts:
at 4% = £16,788
at 6% = £24,180
at 8% = £33,482
:eek:
Current surrender value = £12,795.46
My inclination is to surrender this and pay the £12,795 off the mortgage as well, and buy a cheap life insurance for both of us. (* NB the life & CI cover is expensive because my OH is over 60 this year, and would have been well-retired by the natural term of the mortgage).
What do other people think? All suggestions welcome....
(FYI I have already been down the mis-selling claims route, and did manage to get a chunk of money for some previous mis-selling for HSBC Life though not for this endowment)
Oh, and some additional interesting information: when I rang HSCB today for the surrender value I got a lot of spiel about how they don't want to lose me as a customer and they will ring me back to see if there is something they can offer me that is a better option .... I am waiting for their call, but with some cynicism!
Mortgage = Nationwide tracker, I/O, fully flexible (so can and do pay off chunks off the capital whenever we want, which is why we haven't switched to a repayment). Current monthly payments about to drop to c. £125, so we can now overpay by lots - c. £500 per month.
Original mortgage = £69,000
Remaining mortgage = £37,257 (by lots of little over-payments and a couple of big ones)
Our aim is to pay off this mortgage by over-payments every month, so no intention to keep the HSBC Life endowment as a link to the mortgage.
HSBC Endowmnet policy:
Start Date = 28/02/1997
Maturity Date = 28/02/2021
Monthly premium = £188.83 (this includes joint life and critical illness cover*)
Target amount = £69,000 (hollow laughter!)
Projected final amounts:
at 4% = £16,788
at 6% = £24,180
at 8% = £33,482
:eek:
Current surrender value = £12,795.46
My inclination is to surrender this and pay the £12,795 off the mortgage as well, and buy a cheap life insurance for both of us. (* NB the life & CI cover is expensive because my OH is over 60 this year, and would have been well-retired by the natural term of the mortgage).
What do other people think? All suggestions welcome....
(FYI I have already been down the mis-selling claims route, and did manage to get a chunk of money for some previous mis-selling for HSBC Life though not for this endowment)
Oh, and some additional interesting information: when I rang HSCB today for the surrender value I got a lot of spiel about how they don't want to lose me as a customer and they will ring me back to see if there is something they can offer me that is a better option .... I am waiting for their call, but with some cynicism!
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Comments
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What interest rate are you paying on the mortgage?
I assume the HSBC policy is a unit linked one?What fund(s) is it invested in?Trying to keep it simple...
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Don't know about the funds for the HSBC endowment - how do I find that out? I can't see it on the Red Alert letter stuff - do I give them another ring for this information? It does mention 'Balanced Funds' and 'Secure Funds' in the documentation they sent us, if that heps (means nothing to me!)
The interest rate on the tracker is currently 4.0%0 -
Projections on unit linked policies will be taking a battering at the moment. But your monthly premium will buy more units, so look on the bright side!0
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Check the conditions covered by the CIC policy as a lot of things like prostate cancer were removed from the list of conditions covered in plans started after summer 2002. It may have an influence on your decision to replace or not. A good IFA could guide you.0
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The projections are probably significantly under stating the likely return and hitting target is still a possibility. They are low mainly due to the period in question and current market conditions.
That said, the funds you mention are not going to set the world on fire and HSBC do have better options. that is if you choose to remain with an investment element.I am an Independent Financial Adviser (IFA). The comments I make are just my opinion and are for discussion purposes only. They are not financial advice and you should not treat them as such. If you feel an area discussed may be relevant to you, then please seek advice from an Independent Financial Adviser local to you.0 -
Check the conditions covered by the CIC policy as a lot of things like prostate cancer were removed from the list of conditions covered in plans started after summer 2002. It may have an influence on your decision to replace or not. A good IFA could guide you.
We took out the plan with the CI in March 1997 - can they remove conditions from the plans after they have sold them? It was a pretty comprehensive cover when we took it out, which is why we did it (me being pessimistic and all).
I assume they can't just remove conditions willy nilly on existing plans? (or can they??? - :eek: )0 -
The projections are probably significantly under stating the likely return and hitting target is still a possibility. They are low mainly due to the period in question and current market conditions.
That said, the funds you mention are not going to set the world on fire and HSBC do have better options. that is if you choose to remain with an investment element.
This may be what the promised HSBC advisor might talk to me about - are there any products I should expect him/her to recommend, or any to avoid? Assume I am a numpty in these things....0 -
BlondeHeadOn wrote: »We took out the plan with the CI in March 1997 - can they remove conditions from the plans after they have sold them? It was a pretty comprehensive cover when we took it out, which is why we did it (me being pessimistic and all).
I assume they can't just remove conditions willy nilly on existing plans? (or can they??? - :eek: )
No, they can't change the terms of the contract. It it were possible then Equitable Life would not have gone bust. (They could go bust though and not need to pay out):rolleyes:
Seriously though, if you are looking at an alternative CI plan you could be giving up on some important cover. For instance only a small percentage of Prostate Cancer sufferers die from the condition but a very high percentage of men over 60 have it without knowing. This is why it was dropped by company's. Worth probing (if you pardon the pun). I do!0 -
No, they can't change the terms of the contract. It it were possible then Equitable Life would not have gone bust. (They could go bust though and not need to pay out):rolleyes:
Seriously though, if you are looking at an alternative CI plan you could be giving up on some important cover. For instance only a small percentage of Prostate Cancer sufferers die from the condition but a very high percentage of men over 60 have it without knowing. This is why it was dropped by company's. Worth probing (if you pardon the pun). I do!
Many thanks, I will check this. I must admit the CI part of the plan is the reason I have left this running, as I know it is harder to get good CI policies now (and probably virtually impossible now both of us are 12 years older than we were when we took the policy out).
Funny you should mention Equitable Life - I have a pension with them.... (already mentioned I am a numpty with financial products!)0 -
BlondeHeadOn wrote: »HSBC Endowmnet policy:
Start Date = 28/02/1997
Maturity Date = 28/02/2021
Monthly premium = £188.83 (this includes joint life and critical illness cover*)
Target amount = £69,000 (hollow laughter!)
Projected final amounts:
at 4% = £16,788
at 6% = £24,180
at 8% = £33,482
:eek:
Current surrender value = £12,795.46
My inclination is to surrender this and pay the £12,795 off the mortgage as well
If you continue this policy you'll be paying over £27k if kept until maturity. I'll say no more.Hi, we’ve had to remove your signature. If you’re not sure why please read the forum rules or email the forum team if you’re still unsure - MSE ForumTeam0
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