Scottish Provident -Old Endowment - Stay or Go?

Tattybogle

I have a Scottish Provident (now Phoenix Life) 'with-profits' endowment that is due to mature in October 2012. My dilemma is this: the endowment has just over 3 years to run and has been doing so badly that I was intending to surrender it. In 2008, Scottish Provident's 'with-profits' investment return was -11.2%! so I am basically throwing my money away each month plus a bit extra.
But the problem becomes compounded by the surrender value which is more than 10% lower than my given Total Policy Benefits. Here are the figures:

Basic guaranteed sum assured - £19,740
Declared bonuses - £17,237
Surrender value - £33,137
Monthly premium - £80.80

This endowment was intended to pay off my £60,000 mortgage but sadly it looks as if I will have to use my pension lump sum in few years time. My original endowment was arranged in 1987 and I have therefore been unsuccessful with any claim against the broker/company that sold me the scheme. Also, I have read that no terminal bonuses have been paid out for Scottish Provident endowments for a few years.

Your thoughts about surrendering the endowment and putting it in an interest account whilst also investing the premium every month?

Thanks...

EdInvestor

What interest rate are you paying on your mortgage?

Tattybogle

6.19% but reverting to SVR with Nationwide in August. Another dilemma that many of us will be facing!

kippen_noedel

take a look at companies who buy with profits endowments, the amount they are willing to pay for it will give you a good indication as to the real value.

EdInvestor

If you cashed in this endowment and used the lump sum to reduce the mortgage now, also increasing the monthly mortgage payments by the amount of the endowment premium, your return at maturity would be 42,883, guaranteed. This is better than your existing guaranteed value.

Suggest you ask for projections of the endowment's value at maturity and compare them with the above to see what you should do.

Tattybogle

Edinvestor,
Thanks for that suggestion. It's something I had not thought of and will definitely consider. I will press Phoenix Life for projections and also make further enquiries about selling the endowment, although I doubt it will attract many/any offers.
Having checked back through my bonus statements it appears that this endowment has stagnated since 2002 meaning that around £7000 of my money appears to have been wasted. Not a penny seems to have been paid in bonuses over that time, although I am also aware that it has provided us with life cover. I feel silly for not keeping an eye on it!
Thanks again.

Dave_N_3

Tattybogle wrote: »

I have a Scottish Provident (now Phoenix Life) 'with-profits' endowment that is due to mature in October 2012. My dilemma is this: the endowment has just over 3 years to run and has been doing so badly that I was intending to surrender it. In 2008, Scottish Provident's 'with-profits' investment return was -11.2%! so I am basically throwing my money away each month plus a bit extra.
But the problem becomes compounded by the surrender value which is more than 10% lower than my given Total Policy Benefits. Here are the figures:

Basic guaranteed sum assured - £19,740
Declared bonuses - £17,237
Surrender value - £33,137
Monthly premium - £80.80

This endowment was intended to pay off my £60,000 mortgage but sadly it looks as if I will have to use my pension lump sum in few years time. My original endowment was arranged in 1987 and I have therefore been unsuccessful with any claim against the broker/company that sold me the scheme. Also, I have read that no terminal bonuses have been paid out for Scottish Provident endowments for a few years.

Your thoughts about surrendering the endowment and putting it in an interest account whilst also investing the premium every month?

Thanks...

Sorry to butt in on your thread
I’m in a similar situation to you.
I have a Scottish Provident policy and not sure what to do.
Basic guaranteed sum assured - £17108
Declared bonuses - £11570.40
Surrender value now - £21280 - (Surrender value Oct 08 - £23588)
Monthly premium - £78.36
Matures April 2014
I think the thing that confuses me is when they send out the ‘Mortgage Endowment Illustration’
When they say if the policy grows at 4% it’s worth £31100 – 5.75% £33700 - 7.5% £36500: etc and that’s not including Terminal bonuses which is 14% this year.
The policy is not gaining any annual bonuses; I don’t think the ‘Mortgage Endowment Illustration’ applies to Scottish Provident Policies – but not 100% that’s the problem
Does anyone know it what it all means –?
Dave
Don’t want to cash it in to find out it’s worth a lot more if I let it mature.

EdInvestor

Dave_N wrote: »

When they say if the policy grows at 4% it’s worth £31100 – 5.75% £33700 - 7.5% £36500: etc and that’s not including Terminal bonuses which is 14% this year.

It does include TBs.

What interest rate are you paying on your mortgage?

Dave_N_3

EdInvestor wrote: »

It does include TBs.

What interest rate are you paying on your mortgage?

Lucky at the moment 1% over base until Feb 2010 -

Dave N

EdInvestor

OK, wait until February when you are due to move to a higher rate and then cash in and use the money to reduce the mortgage.