Question to sell Endowment

davidncohen

I'm currently looking at my Endowment - I kept paying into it, as an investment, after I sold the property I'd taken out the endowment mortgage on.

Details as per my bonus statement year ended 31-Dec-2004 (don't have 2005 one yet):

Basic sum assured: 14382.00
Total existing bonuses: 9298.10
Total new 2004 annual bonus: 224.10
Total bonuses: 9522.20
Total of basic sum assured and annual bonuses: 23904.20
Guaranteed amount on death: 47000
Sum assured annual bonus rate: 0.75%
Existing bonus annual bonus rate: 1.25
Current final bonus rate: 53%
(Natch, this is not guaranteed)
Monthly payment: 67.70 (up-to-date)
Type: Low start with profits
Life assured: Mine

Surrender value (as at 15/02/2006): 20214.90

I'm considering getting a TEP valuation on it. Is it worth keeping on and continuing to pay the premiums. If not, will I get better returns elsewhere?

All help appreciated.

David

dunstonh

2005 bonus statement would be vital as the better WP funds have seen big increases whereas the poorer ones have seen little or no increase. ISeeing what you got in 2005 will give you an idea of where yours is heading.

You dont say who the company is and with profits performance potential can only be considered if the company is known.

davidncohen

Ta - missed some info.

It's with Legal & General and matures in 2013.

david

dunstonh

Should have also asked what the projections are and what rates were used, sorry.

L&G are financially strong but they have been very silent on with profits. Whereas you have the very strong Norwich Union and Pru With Profits funds, which are performing very well and they are both still marketing for new business, L&G say they still support it but do nothing really big on WP now.

I havent done any reviews of a L&G endowment so have no information to compare against. Indeed, I would really want to see the 2005 figures to compare against the 2006 as real figures are so much easier to get guidence on what you should do than a bonus announcment that says some bonuses have gone up and some have gone down.

davidncohen

L&G's bonus statements don't usually come through till about April so I won't know 2005 performance for a couple of months.

The last project letter I had was in August 2004:

Assuming investments grow at (each year): 4% 6% 8%
Project final amount: 32600 37600 43200

Regards,

David

EdInvestor

Hi David

If you surrender and pay the proceeds into the bank @4% also paying in the premiums unti maturity you should end up with 33,184.This compares with a guaranteed value of 23,904 and a projection @4% of 32,600.The difference is because of the life cover.

It doesn't look at first glance to be a real dud policy, but on the other hand hard to see if the outcome is more likely to be in the 4%+ range (why bother?) or the 6%+ range ( worth considering).

I agree with DH that L&G is somewaht obscure on its WP approach.Certainly worth seeing if you can sell the policy IMHO, as you may get a better idea as to its potential from the TEP traders.

dunstonh

I would wait until April. The 6% figure is within L&Gs potential but its going to be this years bonus statements that tell us how Legal and General are going to treat everyone.

If you see a big jump, then it could well be a keeper. A modest increase then kiss it goodbye. It is really impossible to say with L&G at this time.

davidncohen

I got a TEP value from one firmtoday - 21,500,which is 6% more than the surrender value. Doesn't seem a lot to me.

David

dunstonh

Probably waiting on L&G to report this years figures.

As we said, L&G have the financial strength to be good but there is little published information to be sure and they don't say much. So, whilst it probably deserves better than the 6% you have been given, its possible it could be worse so they are hedging their bets.

CannyGirl_3

I have a similar problem with an endowment, though I think it is bleaker than davidcohen's fortunately it is for a smaller amount too.
Endowment is with Friends Provident (I have to say they are no friend of mine) due to complete 2013. I have just received my 2005 statement & it has made my blood boil

Target amount £12000
monthly payments £16.24
New bonuses added this year - contain yourselves - £5.84
Current minimum guaranteed cash sum £6541
Surrender value £4589
POssible value at 4% £7040, 6% £7700, 8% £8950

I think I have worked out that if I continue to pay the monthly payments I will end up paying about £1000 more than the endowment is likely to grow assuming 4% growth.
On past performance 4% looks wildly optimistic for Friends Provident
If I take the surrender value I would benefit from the payments not made, and in effect lose about £1000 compared with the possible value assuming 4% growth

I converted the mortgage to repayment a long time ago so no issues there, but my question is whether I am right in thinking that
- I really need growth of more than 4% to benefit from keeping the endowment (I am making the assumption that the life cover is not worth very much)
- 4% or more seems unlikely

If so is there a way of getting a higher price for my endowment (I have seen adverts in the paper but have no idea if they are legit or not) or am I stuck with the surrender value?

davidncohen

Cannygirl,

I got another TEP valuation today, but this was less than the first valuation I obtained. It seems to me that it very much depends on who the policy is with that is a primary determing factor. The TEP companies / brokers etc. do make claims that you can obtain up to 40% more than the surrender value, but I think that for the majority this is optimistic.

Hope this helps.

David