Guardian Endowment Advice

amethystcash

Apologies - this is a LONG post.

We have an endowment with the Guardian with the following details:

25 year plan - maturity date May 2018 for £40,000 so just about 9 years left.

It is an indexed plan - 5% increase on protection benefits and 5% on monthly plan payments.

We asked for information on what the plan would give us if we cancelled indexation and we appear to have some conflicting advice.

First thing is the information says there is a mortgage connected to the plan even though we've written to them (2 years ago) to advise them there isn't - does this make any difference? I believe it does as the money would be paid to the BS rather than us when it matures - can anyone confirm?

So here's what the latest forecast advises:

Life Protection £79,206 (joint life first death) - would that be affected at all if we cancelled the indexation?

How would the plan perform without the change - again confusing as they are calling this "THE EARLY YEARS" - as said before, plan's been running for 15 years now! - i.e. with indexation on monthly payments and protection continuing:

Year 1 Paid in £15,219 Get back £10,200
Year 2 Paid in £17,312 Get back £12,200
Year 3 Paid in £19,583 Get back £14,700
Year 4 Paid in £22,043 Get back £17,600
Year 5 Paid in £24,717 Get back £20,700
Year 10 Paid in £42,331 Get back £43,200

If we stop indexation here's the forecast:

Year 1 Paid in £15,219 Get back £10,200
Year 2 Paid in £16,626 Get back £11,900
Year 3 Paid in £18,034 Get back £13,700
Year 4 Paid in £19,441 Get back £15,500
Year 5 Paid in £20,849 Get back £17,500
Year 10 Paid in £27,886 Get back £28,500

I have to confess this is as clear as mud to me!

Is it saying:

Option 1 Cost £42,331
Option 2 Cost £27,886
Difference £14,445

Option 1 Return £43,200
Option 2 Return £28,500
Difference £14,700

So if I continue indexation I will pay out £14,445 more and make back £14,700 so gaining £255 in 10 years???

If that's correct I must surely be better stopping the indexation. If I put away the extra money I would have spent each month on the indexation until the plan matures, surely even with the direst of interest rates we have around at the moment it will be worth more than £255 more??!???

If anyone can clarify that the assumptions I'm making on this are correct or otherwise that would be much appreciated. Have to make the decision fairly quickly.

Thanks in advance.