Endowment: Should I cash it in or not?

dean1959

Help, I'm confused, I need advice:

My low cost endowment with Standard Life matures in July 2011. I don't have a mortgage anymore, I paid it off 6-years ago. I decided to keep the endowment running as a savings plan up until the maturity date.

Yesterday I received my annual statement for the last year, and I was shocked to discover how much the plan has devalued. It's devalued by £1300. I took this plan out in July 1986 and to date have paid in £10679.76. The current cash-in/surrender value is £16968.30 as advised by Standard life today.

I hadn't intended to cash in my endowment, but after receiving this latest statement, I'm seriously wondering whether to keep the policy. Considering the current state of the economic climate, my dilemma is; what do I do? Do I freeze the payments, have the policy paid up? should I surrender it, sell it on, or what?

Here's the information from my statement dated 1st Feb 2009:

Total bonuses: £9268.30
Sum assured: £10238
Minimum amount pay out at maturity: £19506.30

Surrender value on 1st Feb 2009: £18243.10
Monthly payment: £39.12
Maturity date: 6th July 2011

Maturity forecasts quoted by Standard life are:

Low (3.75%) £20300
Mid (5.50%) £21100
High (7.25%) £21900

Question is: Is the plan going to devalue even more in the coming months? And if so, do I want to pay another £1100 in total till maturity. Perhaps I should cash it in and put the capital together with the monthly payments into another fixed rate interest savings plan? Doing this may still meet the minimum policy payout of £19506.30. It's a dilemma, And I'm not sure what to do.

Any helpful suggestions would be greatly appreciated.

Robert_Sterling_3

dean1959 wrote: »

Surrender Question is: Is the plan going to devalue even more in the coming months? And if so, do I want to pay another £1100 in total till maturity. Perhaps I should cash it in and put the capital together with the monthly payments into another fixed rate interest savings plan? Doing this may still meet the minimum policy payout of £19506.30. It's a dilemma, And I'm not sure what to do.
Selective quote

It is a dilemma.
Your investment was for a fixed term and with a fixed minimum repayment. In the meantime anything can happen. Nobody knows what will happen between now and maturity. You are not sure what to do but it is your call. I am sorry if this appears to be unhelpful.

pabenny

This looks fairly straightforward on the facts as you report them:

Surrender value today £16,898 + future contriubtions £1,100 = approx £18,000.
Minimum pay out at maturity £19,500

Increase in value over next 2½ years £1,500 = 8.3% which equates to about 3.4% per year tax free.

I'd check how certain the minimum maturity value is before making a decision.

dean1959

pabenny wrote: »

This looks fairly straightforward on the facts as you report them:

Surrender value today £16,898 + future contriubtions £1,100 = approx £18,000.
Minimum pay out at maturity £19,500

Increase in value over next 2½ years £1,500 = 8.3% which equates to about 3.4% per year tax free.

I'd check how certain the minimum maturity value is before making a decision.

Thank you both for replying.

Having thought about this some more: It all seems like 'swings and roundabouts' . It seems I could choose between all 3 options: surrender, paid-up or carry on paying the endowment.

If I've got this right, I could even go for a paid up policy. SL say thay will fix the value at £18589 and add any other rev' bonuses for the remaining years. I could then put the remaining monthly payments into another 3.6% fixed rate account, giving me a total at maturity £19725 + the bonuses. Slightly better than the minimum payout value of £19506.30.

As Robert says; I guess it's my call as to what I choose to do.

I am curious though as to what you mean about checking how certain the minimum maturity value is before making a decision. The £19506.30 figure quoted above had been confirmed as the minimum amount that they will pay out at maturity - it's in my statement. I had assumed that the £19506.30 was a guaranteed sum. Are you saying it's not?