Endowment Compensation

pappadruid

Firstly, big thanks to Martin for actually motivating me to do something about my endowment!! Thing is, I now need a bit of advise!

I was (mis)sold an endowment back in 1993 when I did not have a mortgage. I have only had a mortgage for the last 3 years and all the while have been paying into this endowment policy.

I complained as advised using the advise on this website and have now recieved an offer of £11K from the endowment comapny(Pearl).
Problem is, a condition of accepting the compensation is that I must surrender the endowment policy which I am not too keen to do because it will mature in 12 years when I will still have another 20 odd years to run on my mortgage. So you can see why I am not too keen to do so!!

Can they do this?? Surely by offering me compensation that is an admittance of liability that the policy was missold, and it is for this fact alone that I should be compensated. Does anyone out there have any advice?? Or does everyone agree that I would be daft to cash in the endowment because I think the short term cash gain would equal long term loss!!

Help me out moneysavers!!!

Thanks!! :beer:

dunstonh

Problem is, a condition of accepting the compensation is that I must surrender the endowment policy which I am not too keen to do because it will mature in 12 years when I will still have another 20 odd years to run on my mortgage. So you can see why I am not too keen to do so!!

Pearl are one of the worst insurance companies out there. Now in their 6th year of zero bonus and very little chance of that changing in the next 10-15 years. Why continue to pay money into such a bad plan?

You can more or less assume that the maturity value will change very little from the current value. Although terminal bonuses may increase a little.

Can they do this??

Some debate here. Morally, yes they can and so they should. You are complaining that you should never have had the plan. You won your case and now they want to put you in the position you would have been had you not had that plan.

Surely by offering me compensation that is an admittance of liability that the policy was missold,

No it isnt. Unless they accept liablity for mis-sale, they could be compensating you because their is insufficient evidence that the sale was sold correctly. This doesnt prove it to be a mis-sale. However, the complaints proceedure favours the policyholder here. Some recent stats issued showed that out of 1000 endowment complaints, only 25 were upheld as mis-sales. However a further 200 were paid compensation as the files were insufficent or misssing to prove it was sold correctly.

Does anyone out there have any advice??

Get out while you have the chance.

Or does everyone agree that I would be daft to cash in the endowment because I think the short term cash gain would equal long term loss!!

You would be daft to keep it.

pappadruid

Thanks for the reply Dunstonh!! Some interesting points!! So, you think I am better to cut and run? I am inclined to agree but would like to some clarification to 'The Pearl Promise'.

The Pearl promise is and i quote "We promise that your maturity proceeds will not be less than your target amount provided that the average investment return achieved on the underlying assets between 1st April 2001 and the maturity date of your policy compounded annually and after allowing for expenses and tax is at least 6%".

I know 6% is quite unrealistic but they go on to say "If we do not make 6% we still promise that if your policy maturity value (sum assured plus bonuses) is less than your target amount then we will increase it by 1. the pearl promise amount. or 2. the amount required to reach your target if this is less."

I know this is all Financial Advisor speak, but does this mean anything good for me?!!

My endowment was taken out in April 1993 for £40K. My monthly premium is £48.
The current value including bonuses is £15K. The surrender value is £7K. The policy is due to mature in April 2018. My mortgage is due to end in 2030!

Would you advise keeping the policy taking into account the Pearl Promise (if that means anything at all!!) or accept the offer and possibly make a capital repayment on my mortgage and possible use the £48 pm as an overpayment on my mortgage to help clear the mortgage a little quicker??

Thanks for your help and advice!!

EdInvestor

pappadruid wrote:

My endowment was taken out in April 1993 for £40K. My monthly premium is £48.The current value including bonuses is £15K. The surrender value is £7K. The policy is due to mature in April 2018.

If you surrendered it and put it on deposit @4% also paying in the premiums to maturity you would end up with 20,048. This compares with the current value you quote (I assume this is the guaranteed sum assured plus bonuses) of 15k, which is very unlikely to rise.Of course there will be no terminal bonus.

The Pearl promise is IMHO worthless, sadly, like the Standard life promise.:( .

So you should surrender this policy.

Would you advise... accept the offer and possibly make a capital repayment on my mortgage and possible use the £48 pm as an overpayment on my mortgage to help clear the mortgage a little quicker??

Yes. You will get a better return if you use both the compo money and the surrender proceeds to reduce the mortgage.Worth looking at remortgaging at the same time to repayment, if there are good deals around.

pappadruid

Thaks EdInvestor!! Think I will take your advise!

Finally, any benefit in selling the endowment policy myself rather than surrendering the policy back to Pearl?? If there is a benefit to doing this can you recommend any websites??

Many Thanks!!!

EdInvestor

Nobody will buy this policy I'm afraid.

BTW regarding the misselling compensation, in a case like yours where there is no mortgage attached, the normal arrangement is that they cancel the policy and refund the premiums plus interest.

Is that what's happening in your case?

If so, the policy can't be surrendered or sold.