Advice on endowments

Sassafrass_Hoyden

Hello all

First post anywhere so please be kind In the last eighteen months we've managed to clear all our credit cards and start to overpay our mortgage. It's not been easy, Christmas was the turning point we only put £58 on credit card - an overseas present that wasn't available here. Now it's time to turn our attention to our endowments, originally they were to be used to pay off our mortgage but years ago we were advised to move to a repayment mortgage and keep the endowments for savings. However the three of them received red letters when the bonuses were declared at the end of last year. My question is do we weather the storm or surrender them. I realise that you can only give advise, but any would be appreciated. The details are as follows:

Provider Prudential (Originally Scottish Amicable) 2 policies
Monthly premium £42.17 & £23.20
Maturity date 21.07.12 & 07.04.17
Maturity projections @4% £29300 & £9840 - @8% £33700 & £13200
Target amount £30500 & £15000

Provider Countrywide Assured 1 policy
Monthly premium £27.18
Maturity date 09.07.12
Maturity projections @4% £12000 - @8% £13800
Target amount £13002

Thanks

EdInvestor

Please post the surrender values and the interest rate payable on your mortgage.

Sassafrass_Hoyden

The interest rate is 1.95%, I'm still waiting on surrender values. It's in my diary to chase them on Monday.

Sassafrass_Hoyden

Update to above
Surrender values are Prudential £ 20072 & £8231.88, Countrywide £9483.07

EdInvestor

Sassafrass_Hoyden wrote: »

Provider Prudential (Originally Scottish Amicable) 2 policies
Maturity projections @4% £29300 & £9840 - @8% £33700 & £13200

If you cashed in these 2 policies and used the lump sums to reduce the mortgage, also increasing the monthly payments by the policy premiums, your return at matruity would be 22,827 and 11,997.

Because you are paying a very low interest rate on your mortgage, this is considerably below even the lowest forecast for the big policy. If the guaranteed value of this policy ( guaranteed sum assured plus declared bonuses) is at or above 22,827, then you should definitely keep it and even if it isn't it is still worth holding at this stage IMHO..


However the no risk return on the 2nd policy would beat the lower forecast, so this is not of the same quality. Certainly if your mortgage interest rate rises to anything like the 4% level, this would be a candidate for early surrender.

Provider Countrywide Assured 1 policy
Maturity projections @4% £12000 - @8% £13800

If you cashed this one in and proceeded as above, your return at maturity would be 11,050. I assume this is a unit linked policy?If so it has the potential to bounce back with a market recovery over the next three years to maturity, so I would tend to keep this one.

Sassafrass_Hoyden

Thank you
We are already paying a third more into our mortgage every month.
We have an opportunity to buy a property overseas, we have been watching the property prices and it seems a good time to invest. We have been doing our research on the property prices and the area for a few years now. If we cash these in then we wouldn't have to borrow any money. In light of your assumptions would you suggest borrowing against these or cashing them in to pay for the property? Or is there another alternative I haven't thought of? We haven't committed ourselves to anything as yet. This would be a holiday home for our family, with the possibility to rent it out should we need to.

feisty1

S/Hoyden

Are you aware what you are receiving on here is unqualified opinion and NEITHER financial or mortgage advice. Have you considered by surrendering policies mean the life assurance on these will be discontinued and therefore not pay out in the event of a claim. If you need to replace life insurance this may cost you far more, or you may not get new life assurance, because you are older and your state of health has changed. Are you really prepared to decide upon a major overseas financial investment from opinion received on the internet!

Sassafrass_Hoyden

We do have other life insurance and I am well aware that this is unqualified advice and at the end of the day if I decide to take this advice or not, it will be our decision. Should I cash them in then the life insurance would be rendered null and void, if I left them to mature then the same situation would arise. Any insurance is only valid while the policy is in force.

Sometimes it does help to bounce ideas and information off faceless people, if they agree with you you've won a watch if they don't then their cretons - isn't that the way of the world! That's why forums are so popular.

I wasn't aware that I had given my age or my state of health, do you know something I don't:)

Also can I ask fiesty1 are you and Ed having a lover's tiff as I've noticed that you've had a dig at him more than once.:)

feisty1

I don't know if Ed is a he or she, so no not a lover's tiff!!! As for having a "dig" at "him", not correct, I have mentioned it today, as with our current economic climate more & more people are posting on here regarding cashing in investments, when it is probably the worst time to do so.........

Without an educated guess, you are bound to be older since taking out the endowments, the statement re age & health was made in generic terms.......some people don't even know they have life cover attached


People have different levels of financial knowledge & require different levels of assistance........you yourself required assistance for calculations, "some" people are naive and mistakenly think this site is for advice.........but their again you get what you pay for...........NB and you did ask for advice

Sassafrass_Hoyden

Yes I did ask for advice, other meanings of the word are counsel and opinion, in this instance I merely asked for another opinion. I haven't paid anyone for this opinion nor would I act on anything I read on this or any other website without consulting a financial advisor.

In case you hadn't noticed and I quote "I have mentioned it today, as with or current economic climate more & more people are posting on here regarding cashing in investments, when it is probably the worst time to do so........." what is that if not advice? You make assumptions based on your perception of the situation, Ed on the other hand gave facts and stated his/her opinion.

However you are correct that there are people who are in desperate situations that react to the advice freely handed out in forums all over the world and maybe with hindsight we should not give advice to anyone in case it's misconstrued.
But then there wouldn't be any forums, would there?

feisty1

My comments are not advice it is my opinion.........