Advise needed should I surrender my Standard Life endowment ??

iwant2savemoney

Any advise most welcome

Provider.. Standard Life
Amount paid on death £14,500.
Declared bonuses....£3,396
Monthly premium...£19.56
Maturity date.....June 2013
Min amount paid on maturity £8,109

Current value £6.679.67
Final bonus £476.26
Total current value on 01/02/2009 £7,155.93

forecast @3.75% = £8,450
5.5% = £9.050
7.2% = £9,690

This plan is now not needed to pay my mortgage

theartfullodger

http://forums.moneysavingexpert.com/showthread.html?t=1605697


You are missing one key thing in your data provided... What will the stock market do to SLs bonuses between now & 2013. i.e. what does the Crystal Ball say?? FK I'm afraid...

Depends how much of a gambler you are and what you'd do with the money - or do we assume stuff it in a savings account at 1% pa return less tax???

Cheers!

Lodger

NAR

The one thing missing in your post was "current" before forecast. Also terminal bonuses are not guaranteed. Financial outlook in the next 12 months is very gloomy. I would suggest trying to find somewhere that is going to definitely get you a comparable return for certain over the next 4 years - perhaps a bond?

EdInvestor

Please post the surrender value and the interest rate payable on the mortgage (even though the two are not now connected).

iwant2savemoney

EdInvestor wrote: »

Please post the surrender value and the interest rate payable on the mortgage (even though the two are not now connected).

Phoned Standard Life this morning surrender value is £7,292.12
I do not now have a mortgage as it is paid in full.

Thanks.

ylesia

Hi, it looks like they are giving you a good surrender value. In 4 years time the minimum amount is £8109, another four years of reversionary bonus is probably going to make little difference in this market so this minimum guarantee is not likely to increase very much. You are protected to a certain extent with being so close to maturity as TB rates are usually smoothed (check your funds PPFM for the smoothing policy).

As previous posters have said, you just have to weigh up the risks. If it were me I would check your policy documents and the PPFM for the fund to see what TB you are likely to get at maturity and then decide. You are currently getting a terminal bonus of around 7%, I would expect this to be higher at maturity even in the current market but of course nothing is guaranteed.

iwant2savemoney

ylesia wrote: »

Hi, it looks like they are giving you a good surrender value. In 4 years time the minimum amount is £8109, another four years of reversionary bonus is probably going to make little difference in this market so this minimum guarantee is not likely to increase very much. You are protected to a certain extent with being so close to maturity as TB rates are usually smoothed (check your funds PPFM for the smoothing policy).

As previous posters have said, you just have to weigh up the risks. If it were me I would check your policy documents and the PPFM for the fund to see what TB you are likely to get at maturity and then decide. You are currently getting a terminal bonus of around 7%, I would expect this to be higher at maturity even in the current market but of course nothing is guaranteed.

Hi. It states the following....

We currently estimate that there may be a MEP payment when your plan matures of between £320 and £480 it could be nil. This is only a estimate

EdInvestor

iwant2savemoney wrote: »

forecast @3.75% = £8,450
5.5% = £9.050
7.2% = £9,690

If you surrendered the policy now and put the lump sum on deposit at an average of 2% after tax over the next 4 years also paying in the premiums, you would end up with 8,893.

This beats the lowest forecast and the guaranteed value. It depends on what you think terminal bonuses will do over the next 4 years and how you expect interest rates to move.

If you think TBs will go down (I do) and interest rates will rise (ditto) -or you can get better than 2% net already in a guaranteed account , then I would dump the policy.

You do have free insurance included so if you need to replace that, it's probably easier to hold.Not much in it really.

iwant2savemoney

Hi. If I do surrender this policy my thinking was to split this into 2 Natwest cash ISA's (Wife and myself) paying 3.51% , would that be a good option ???. Thanks.

EdInvestor

iwant2savemoney wrote: »

Hi. If I do surrender this policy my thinking was to split this into 2 Natwest cash ISA's (Wife and myself) paying 3.51% , would that be a good option ???. Thanks.

Yes, way to go.:)

ylesia

iwant2savemoney wrote: »

Hi. It states the following....

We currently estimate that there may be a MEP payment when your plan matures of between £320 and £480 it could be nil. This is only a estimate

I would surrender then, if they are telling you now that they only estimate the Terminal Bonus to be a maximum £480! I'm not familiar with this specific product but I do work in life assurance and unless this is a specific maturity benefit and in addition to your normal terminal bonus then taking your money seems to be the way to go.