Standard Life Endowment

bullitt99

l took out an Endowment with Standard Life in Aug 1989 - which still has 5 years and 3 months to run. I pay £41.62 a month (£500 per annum) and it was supposed to pay out £31,000 at termination. However, I received my 2009 Statement on 01/02/09. This was a "Red" warning letter - it stated that the 2009 value of this policy was £13,548 and the 2008 value was £12,757. In other words, I had paid additional premiums totalling £500, but the value had decreased by almost £1000 - a total yearly loss of £1500. The projected value is now only £16,800 ( at a estimated growth of 3.75% - the minimum proction on the form) leaving a projected shortfall of £14,200. (There is also a minimum Guarentee of £16,226 providing premiums are fully paid).
My question is : I feel that I am currently throwing good money after bad - so should I surrender this at a surrender value of £11,946 - and then use this to overpay the mortgage.( And then use the premiums to either overpay the mortgage or invest in a Cash ISA?) Or should I just wait and keep my fingers crossed in the hope that things might "pick up" over the next 5 years?
(I have just received an email from an endowment action site that says they can sell this for £12,250)

dunstonh

And then use the premiums to either overpay the mortgage or invest in a Cash ISA?)

You cant invest in a cash ISA. You save in a cash ISA and invest in a stocks and shares ISA.

You have £2622.06 to pay. You can currently get £12,250 on sale. So, £12,250 plus £2622.06 saved (by not paying) = £14872.06

Keeping it means you will get a minimum of £16,226 but after paying £2622.06. So, £16,226 minus £2622.06 = £13,603.94

You need to find out how much your mortgage promise value range is and add that to the minimum. This will likely push the keep option up in value and mean that keeping it is the best option. Plus, things are improving on the markets and you should see some improvement on the SL bonuses if it keeps up. The rates are almost certainly going to be better than cash in your savings account. Paying off the mortgage may be a better option depending on the mortgage interest rate.

EdInvestor

Post your mortgage interest rate for a view.