endowment policies - estimating terminal bonuses

vimto_kid

Hi,

Is there any way to estimate how much a terminal bonus may be on a with profits endowment policy? I am considering selling my NU endowment and am trying to establish the value of it prior to making a decision on whether to sell.

I've had some figures back from NU but when i called them, they told me that the figures didn't include any terminal bonus. When i asked them what the terminal bonus would be - or even what the current terminal bonuses are (to try and get some kind of idea), they said they couldn't tell me.

What i am concerned about is if the standard estimated maturity values they are quoting are underestimating the likely actual values because they don't include these terminal bonuses.

Any help would be appreciated,

cheers,

Vimto Kid

dunstonh

Is there any way to estimate how much a terminal bonus may be on a with profits endowment policy?

Not unless you have a crystal ball that gives your future returns.

I am considering selling my NU endowment and am trying to establish the value of it prior to making a decision on whether to sell.

Aviva will give you the current value and tell you the Terminal bonus accrued to date. They cant tell you what the future bonuses will be though.

I've had some figures back from NU but when i called them, they told me that the figures didn't include any terminal bonus. When i asked them what the terminal bonus would be - or even what the current terminal bonuses are (to try and get some kind of idea), they said they couldn't tell me.

They can tell you what the current TB accrued on the plan is but often the telephone staff are reluctant to give it. Ask for the figures in writing and it will be on there. Whilst you are at it, also ask them your mortgage promise value as you need to factor that into the calculation as well.

What i am concerned about is if the standard estimated maturity values they are quoting are underestimating the likely actual values because they don't include these terminal bonuses.

Some of the aviva plans do not include terminal bonus accrued to date on the projections and therefore do potentially understate the likely outcome. However, some do include the figure to date. The paperwork supplied should indicate which is the case although sometimes you do need to seek clarification as it isnt always clear.

vimto_kid

Thanks DunstonH,

I'll get in touch with them to clarify those points - thanks also for the pointer about the mortgage promise value.

Is the ammount of the final terminal bonus payment (whilst not guaranteed) usually significantly higher than the terminal bonuses that a policy accrues over the rest of its term?

thanks once again,

Vimto Kid

PS - oops - forgot about the name change to Aviva.. i wonder if that really was money well spent... :rolleyes:

dunstonh

Is the ammount of the final terminal bonus payment (whilst not guaranteed) usually significantly higher than the terminal bonuses that a policy accrues over the rest of its term?

With some plans they do wait until maturity to calculate. However, most accrue it as you go along and it doesnt jump up on maturity. Std Life plans have been seen to jump up a lot on maturity but I havent seen any Aviva plans do that.

Forgot about the name change to Aviva.

I'm trying to get into the habit. I already had to edit out NU on this post and retype Aviva

EdInvestor

In the old days a TB could double the size of the policy's guaranteed value.Not nowadays - indeed at many firms you are lucky to get any terminal bonus at all

Robert_Tycelyn

Thanks once more dunstonh,
My annual bonus statements from Aviva always refer to a total 'regular bonus' awarded. I have assumed that a terminal bonus is only actually awarded at the end of the policy. What do you mean by "terminal bonus accrued to date"?

dunstonh

Behind the scenes the terminal bonus is adjusted anything from twice a year to daily. You dont personally get to see that amount but IFAs are told it and the staff as Aviva can see it. It will go up and down and the amount it currently stands at can be given but its not always shown on all plans. I have an Aviva statement on my desk and its showing on that one but I have seen them without it as well.

If the plan is assigned to an IFA currently, that IFA can find out the figure for you. Otherwise you just have to ask them to give you the info in writing. (dont try and persuade the telephone staff as they dont have the data in front of them a lot of the time on legacy plans. The back office need to do it).

EdInvestor

The accrued terminal bonus will be included in the surrender value, possibly minus an early surrender penalty.

bristolleedsfan

Ive had maturity value given to me based on terminal bonus as it was a few days ago. ( actual percentage not quoted) The actual maturity figure will of course reflect the actual terminal bonus in force on the actual maturity date.

Was wondering how much the two resident experts believe the policy might reduce by come 9th July. :eek:

Was a low cost start up with profits endownment over 25 years, 28.00 a month has been paid ever since the low start reached 28.00 which from memory was after 5 years.

Figures at statement year end : 31.12.2008

Basic Sum Assured 6030

Guaranteed Life Cover 15000 ( That was morgage amount at outset, morgage has been paid off for several years)

Existing Bonuses 7253.50

2008 annual bonus rate applied to basic sum assured 1.25%

2008 annual bonus rate applied to existing bonuses 1.25%

Total 2008 bonuses 166.00

Total basic sum assured and annual bonuses up to 31.12.2008 13449.50

Current final bonus rate 45% ( Obviously mega low compared with mpst previous years)


New for 2009 due to market conditions :eek:

Charge of 0.75% of the value of the policy during 2009 ( will that affect the maturities in whole or prorata.

Letter dated 27th May gives amount payable 16910.20 ( based on current final bonus rate)

EdInvestor

I would suggest you ring up now and get a surrender value.
Compare that with the estimated maturity payout. If you think the policy value may go down you can always surrender now.

Does L&G have a mid year bonus announcement before your maturity date?This would offer an opportunity for them to cut TB rates.