Endowment - to cash or not to cash

notyetretired

Norwich Union With-Profit fund due to mature 1 April 2010

Monthly payment £68.98

Plan value £30,000

Minimum life insurance amount £13,170
Regular bonus (guaranteed to pay out) £7,625

Luckily for us we have paid off the mortgage so are not going to have a shortfall crisis, but are now wondering, in the light of scary articles, whether we should give up on it and cash it in.

Also, NU has contacted us about fund transfer and reattribution possibilities, and resultant payouts. Is this likely to happen and be worth waiting for?

Thanks for any thoughts!

dunstonh

are now wondering, in the light of scary articles, whether we should give up on it and cash it in.

The horse has bolted. The scary articles are after the event. The time to do anything, if you wanted to, was around 12-18 months ago

Also, NU has contacted us about fund transfer and reattribution possibilities, and resultant payouts. Is this likely to happen and be worth waiting for?

The special bonuses are being paid in December for the next 2 years (first was last month). The reattribution is on course to be this year.

Gorgeous_George

I think another horse may be along soon.

GG

notyetretired

Thanks very much dunstonh for your comments. I had a look at the NU site for info on the special bonuses which are 3.6% this time around, ie about £400 to me.

GG - appropriate name to be talking about horses - what might this 'other horse' be?

I might phone them for the surrender value anyway, just to see. Am I assured of £20,000ish at term - is this money protected at all in the way that bank cash is? How much is a NU "guarantee" worth?

I remember my father-in-law telling us in 1990 how great endowment policies were and that he got a new car out of his pay-off... sigh.

Gorgeous_George

It might be an horse for bolting.

When things go bad it is easy to assume that the worst is over. It might not be.

GG

EdInvestor

notyetretired wrote: »

I might phone them for the surrender value anyway, just to see. Am I assured of £20,000ish at term - is this money protected at all in the way that bank cash is? How much is a NU "guarantee" worth?

What is guaranteed is the "guaranteed sum assured" plus the declared (annual) bonuses. The terminal bonus is not guaranteed and nor is the surrender value.

Payouts are expected to keep falling as the markets are not yet recovering.While a reattribution payment might compensate for a fall in the underlying maturity value caused by poor markets, you would still have wasted a year's premiums.

At the moment, only in cases where there is a big gap between the surrender value and the guaranteed value can one recommend that people hold on.

notyetretired

Thanks very much, very interesting. We haven't been paying as much attention as we should, I fear. I will find out the surrender value tomorrow, which might make things clearer.

notyetretired

Surrender value as of today £19,300. Sounds good to me especially as we are planning to buy soon and that would reduce the mortgage payments nicely.

The guy on the phone said that I should also look into another company buying the mortgage as it might be a better deal?

EdInvestor

You can get quotes for some endowments here:

https://www.apmm.org