Norwich Union Endowment-Should I sell it ?

kubota

Hi, I have recently started reading this forum, and find it very useful.
I would really appreciate anyones views on if we should surrender a couple of endowments we have with Norwich Union, and use the cash to pay off existing loans and reduce the mortgage. These endowments were originlly set up to pay off £59135 in total.
The basic detials are

Start 1.9.88
ends 1.8.2012
Guaranteed sum £10489
bonus £6223
Pymt £49
surrender £10370

Start 28.4.87
ends 28.3.2012
Guaranteed sum £10320
bonus £7069
Pymt £46.20
surrender £11379

The bonus and settlement values shown above are based on 2005 details, but I assume they won't have changed dramatically in the past six months.

Any suggestions would be welcome.

EdInvestor

Hi kubota

Not a bad pair of endowments these - Norwich Union has quite a decent WP fund.:)

If you surrendered policy 1 and put it in the bank @4% also paying in the premiums to maturity you should end up with 17,106, which is only slightly ahead of the guaranteed value of 16,712.

Ditto with policy 2, the end result would be 18,138, only slightly ahead of the GV of 17389.

Unless you can get a sizeable increase on the surrender value from a TEP trader, I would be inclined to keep these, as the NU fund has a good equity component and thus an extra terminal bonus is a reasonable possibility: and even if it doesn't appear you will have lost little, if anything, and had free life cover over the period.

If you have loans with much higher interest rates, then that might be a reason to cash in, and also it could considered if you want to repackage the whole deal - reduce the amount owed and switch to a new repayment mprtgage to get rid of a shortfall.

But I wouldn't see these policies as the kind of duff endowment you should exit straight away under all circumstances.

kubota

Thanks for your reply, your comments are appreciated.
I think I'll hold onto the endowments for the time being, if only as a savings policy. I've already reduced the interest only part of my mortgage to take account of any potential shortfall. So I should still end up with a few quid left over when the policies mature.