Endowments with Profits.

golden_girl

Hi,

I have read many threads on this board from alot of people asking about whether to surrender their policies. If you received a letter saying its on track is it just a case of when it does start to show a shortfall then decide then what to do.

My policy is as follows:
I have an endowment plan that matures 1/12/2014 Monthly payments £78.94.
Sum Assured £19640.00 with profits.
Guaranteed Death Benefit £40,000. This plan does have a terminal bonus on maturity.(Not sure how much this will be)
Last letter received dated 15.05.05 is policy on track to pay £40,000.
They have stated the following: Assuming your investments grow in the future at:
4% Projected final amount £39,900
5% Projected final amount £42,400
8% Projected final amount £50,800
Target Amount £40,000
My 2004 bonus statement(Can't find my latest one) shows total guaranteed value is £34,016.48.

Do I have anything to worry about at the moment??.

Many Thanks for any advice

ReportInvestor

You don't say who your policy is with - and that's important, although your figures suggest one of the stronger providers .

golden_girl

Hi,

Its with the Royal London.

Thanks

ReportInvestor

I think you can sleep fairly easily - CityWire March 2006

".....Despite the fall in payouts, Royal London claims payouts on its policies are amongst the best in the industry. The insurer’s with-profits fund had a good year last year, returning 17.4% in 2005 compared to 12% in 2004. The fund contained 43% equities, 13% property, 37% bonds and 7% cash/other at the end of December."

This is a good recent performance and the mix of the fund is such that the 5% growth needed to pay off your mortgage is very likely to be achieved .

golden_girl

I shall thinnking about for a while now.

Many Thanks for your help. :T

golden_girl

oops meant to type I shall stop thinking about it for a while

ReportInvestor

You're welcome. It's nice to be able to give the occasional piece of good news in the nebulous world of with profits.

EdInvestor

Hello goldengirl

It might be a good idea to have a look at your policy based on more up to date figures.Perhaps you coul post the surrender value (ring up and ask) and also the declared bonuses (if any).It's not clear from what you've given so far if your policy is a conventional WP endowment or a unitised WP one - perhaps you could check that when you ring up .

The Royal London fund is in reasonable condition, but the presence of more than 40% in bonds and cash means a stellar return is unlikely. High charges on a fairly old policy like this could also have an effect such that you could be better off by surrendering the policy, reducing the mortgage and converting it to repayment.

Can't really say without knowing the surrender value at the moment.

golden_girl

I will phone up on Monday for some more information.
Thanks

EdInvestor

Perhaps we can sort out your debt problem at the same time

golden_girl

Since finding about this site it has really made me realise the importance of
becoming debt free/mortgage free and planning long term for when we retire. :rolleyes:

As well as sorting out my mortgage and debts I also need to think about some sort of pension or savings for long term. OH has a pension with work but I haven't. I have 2 long term polocies that mature when I retire but nothing else.

My mortgage details is as follows (2 year fixed deal ends in December).

Fixed rate 5.390% till 31/12/2006.
Loan amount £92250 for 20 years which includes £43,000 interest only. Repayment type Part Investment/Part Capital and interest. Monthly amount £529.41. According to my mortgage account balance £90618.37 it does say htis is not an repayment figure so nore shure how accurate this is.?

We have 2 endowments one as previously posted with Royal London and the other with Friends of Provident. The Friend of Provident is only £5.13 a month so probably not worth mentioning.

The Barclaycard is going to be 0 by the time my mortgage needs reviewing.
(Daughter owes £700 hope to get this over the coming months).

Once I get the info prehaps you can work some magic