Surrender Endowment - advice please?

mike123456_2

I have a couple of Eagle Star Endowment Policies which I am considering surrendering. I dont need the life insurance aspect of the policies. Am I better off continuing to pay the premiums or surrender, invest the proceeds and the premiums in a different (but safe) form of investment with relatively quick access (just in case of unemployment etc..)
I think that I am best off surrendering. Am I correct?
Thanking you in advance for your help,

Policy 1
Guaranteed Sum Assured £9347
Existing Bonuses 12/2004 £8053.75
New bonus 12/2004 £43.50
Surrender Value £16826
Monthly Prem £37.21
Mature date 18/07/2009
Projected final amount at 3.75% - £19200

Policy 2
Guaranteed Sum assured £5982
Existing Bonuses 12/2004 £2968.64
New bonus 12/2004 £22.38
Surrender value £6802
Monthly Prem £27.27
Mature date 17/06/2012
Projected final amount at 3.75% - £10,600

EdInvestor

mike123456 wrote:

Am I better off continuing to pay the premiums or surrender, invest the proceeds and the premiums in a different (but safe) form of investment with relatively quick access (just in case of unemployment etc..)
I think that I am best off surrendering. Am I correct?

Yes. Policy 1 would make 20,343 if surrendered and invested @4%, also paying in the premiums to maturity.Policy 2 would make 10,802.

Both these figures are well ahead of both the guaranteed values and the projections.There's no point in taking a risk to achieve a likely outcome worse than cash.

mike123456_2

Many thanks, I value a second opinion. - I will actually be getting more than the 4% that you used for your calculation. I will be paying off a £6k loan that is costing me 5.89% at the moment, using the money saved from the loan payments and the endowment policies to overpay my mortgage (5.09%) by £100 per month. Will put £12k into a Halifax isa, (£6k before April, £6k just after) paying 5% interest. The remainder will go into a Sharesave scheme that my employer operates that pays 3.0% interest plus option to buy shares in 3 years time at a discounted rate (Been a very good money earner in the past!).

EdInvestor

mike123456 wrote:

Many thanks, I value a second opinion. - I will actually be getting more than the 4% that you used for your calculation.

Good thinking Mike, way to go .Almost anyone who has borrowing will be able to beat most likely endowment maturities these days and with no risk. There are only a few exceptions.

dunstonh

Almost anyone who has borrowing will be able to beat most likely endowment maturities these days and with no risk. There are only a few exceptions.

That's a bold statement. May well apply to with profits funds but I wouldn't go as far to attach it to unit linked funds.