Terminal bonus on Endowment

Muffin2319

I had a 30 year with profits endowment policy mature on 1 January 2009. In November 2008 I received the the details of the predicted terminal bonus, however, when the maturity statement arrived the terminal bonus was 30% less than predicted. On questioning the Insurance Co I was advised that they reduced the terminal bonus rates effective 1 January 2009.

Whilst I accept that the predicted bonus letter did contain a caveat that the amount of the bonus was only an estimate, changing the rate on the day the policy matures seems unjust to me. Have I the basis of argument with the Insurance Co or am I just unlucky.

Trying_to_be_good

Sorry, Muffin2319, I think you're just unlucky. A lot of the insureance companies are reducing their bonus rates further - you're probably better off than those whose policies are maturing in the next few months, though I know that doesn't soften the blow.

dunstonh

changing the rate on the day the policy matures seems unjust to me.

Not really. Conventional with profits plans have always done this on a defined date. They have to do it one day and no matter what day they choose there will always be winners and losers.

Have I the basis of argument with the Insurance Co or am I just unlucky.

None at all. You were just hit by the stockmarket crash occuring in October/November and the having a policy mature the wrong side of a defined bonus date change.

It could have gone the other way just as easily had the crash not occured. If 2008 had been a good year you would have got an increase in your terminal bonus even if was just one day. Thats the way it goes and that is part of the reason these plans are obsolete and no longer available. Although modern plans would have seen your value falling in October and November but rise in december. So, you wouldnt have avoided the loss with a modern alternative.