Friends Provident Endowment

simpsonsfan

I have a Friends Provident unit linked endowment, which I am considering surrendering. Am I doing the right thing to cut my losses now?

There is no guaranteed sum assured as it is a unit linked endowment, invested in with profit 4 fund.
The current surrender value is £15,200
Declared bonus... not shown on recent statement.
Monthy premium £105 per month
Maturity date Aug 2014
Maturity forecasts 4% £26,900
6% £28,700
8% £32,200

It was supposed to produce a £40,000 target, so way off the mark!
Interest on current mortgage 2.4% (on tracker but deal finishes in Aug 09 so this interest rate will probably go up substantially)

Is it a wise choice to cash in the endowment at the bottom of the market, or should I hope that the fund will increase in value?

Thanks in advance

EdInvestor

As it's a unit linked endowment it stands a good chance of recoivering losses over the next year or two.In addition you are paying a low rate on your mortgage.I would hold the policy for now and review the position when you remortgage if the rate increases significantly.

simpsonsfan

Thank you for the quick reply. I was thinking along the same lines, though I don't know the difference between a unit linked endowment and a standard with profits endowment, I must admit.

Thanks once again.

iannj

simpsonsfan wrote: »

I have a Friends Provident unit linked endowment, which I am considering surrendering. Am I doing the right thing to cut my losses now?

There is no guaranteed sum assured as it is a unit linked endowment, invested in with profit 4 fund.
The current surrender value is £15,200
Declared bonus... not shown on recent statement.
Monthy premium £105 per month
Maturity date Aug 2014
Maturity forecasts 4% £26,900
6% £28,700
8% £32,200

It was supposed to produce a £40,000 target, so way off the mark!
Interest on current mortgage 2.4% (on tracker but deal finishes in Aug 09 so this interest rate will probably go up substantially)

Is it a wise choice to cash in the endowment at the bottom of the market, or should I hope that the fund will increase in value?

Thanks in advance

hi, i had the exact same policy as yours at friends provident - i have surrendered it yesterday ..... i cannot afford any more losses on this extremely poor performing fund ..... even in the good stock market years it was very poor in comparison even to other similar funds...
i did add on the surrender notes to friends provident.... offering my services as a fund manager, as i also feel my 8 year old could have acchieved better fund performance.....
i showed my surrender figures to an independent adviser & he could not believe even as poor as endowment fund performances are how much worse still this policy was .... hope this helps

EdInvestor

simpsonsfan wrote: »

Maturity forecasts 4% £26,900
6% £28,700
8% £32,200

What you have is not a unit-linked endowment but something called a "unitised With-profits endowment", a different beast.

If you cashed it in and used the lump sum to reduce the mortgage @2.4% also increasing the mortgage payment by the reducndant monthly premium, your return at maturity would be 23,809, which is well below even the lowest FP forecast - the fund should make 4% over the period.

However if you end up with a new mortgage @5% adn proceed as above, your return at maturoity would be 26,549, which is almost the same as their bottom forecast but with no risk. So little point in holding the policy.

So my suggestion remains the same as before, though the potential of the policy is lower as it is unitised WP rather than unit linked..

Gorgeous_George

I'd surrender.

Why do you think it will do well? Do you think the FTSE is low?

GG