Norwich Union Endowment - worth keeping?

mpet

Hi

I've just recieved my yearly statement from NU. I have a 20 year low cost endowment which will mature in MArch 2014 - supposedly to pay a £100k mortgage. The details are as follows:

Monthly payment £229.09

Minimum guaranteed sum £44,000

Bonus this year £498.80

Total bonuses to date £14,438.70

According to the blurb that came with the statement, the split of this with profits fund is made up as follows:

UK Shares - 41.3%
International Shares - 13.1%
Property - 18%
UK fixed interest & corporate bonds - 19.4%
International Bonds - 2.9%
Cash - 5.3%

Estimated average return 7%

All of which is very interesting, but means nothing to me. Is this good or bad and will it come anywhere near the £100k I need to clear this mortgage. In prevous years the statement has been 'doom & gloom', but this one seems to be termed in a more positive light.

I'm not too bothered about meeting the £100k as we are planning to move in the next year or so to a cheaper property so will end up with a smaller/nil mortgage. But what I woild be interested in is whether it is worth keep paying £200+ each month.

Thanks

mpet

EdInvestor

What is the surrender value of the policy? (You may need to ring up to find out.) And can you just check the Guaranteed sum assured ( or give the total guaranteed value at maturity so far.).

mpet

Hi

Finally remembered to take papers to work and call NU.

The current surrender value is £36011.70

The guaranteed sum assured is £44000

EdInvestor

Hi mpet

If you surrendered this policy now and put the money on deposit @4% also paying in the premiums to maturity, you should get 75,150.

If the interest rate was 7% ( as they project the WP fund will make) then you should get 91,126.

I'd have thought that this indicates the polciy has a reasonable chance of hitting the 100k target, as the surrender value will contain a penalty for early departure, thus the actual value of your fund at present is probably a bit higher.

So this is not a bad policy and the charges do not appear to be too high. As you can see from the investment mix, it has a very respectable percentage in growth assets like equities and property.

One of the few worth keeping to my mind, unless you want something more transparent than a With profits investment, which will still be subject to MVA penalties and such, as in the past.

mpet

Edinvestor

Thanks for your help. Looks like this will be worth holding on to. Even if I move/reduce my mortgage, it looks good as a savings plan. Nice to hear some good news for a change!!


Mpet