Cash surrender offer for endowment

vanessa_vamp

I have a Friends Provident with profits endowment policy which has been running since September 1988 and will mature September 2013.

I am timed out and am not able to claim misselling.

It was supposed to pay out £30,000 but has a shortfall of between £12,000 and £6,000 (depending on assumed investment growth). The growth this past year has been approx £15!

The FP surrender value on 11 May 2005 is £10,662 but I have recently been offered £15,987 as a cash surrender value through a company called Integrity.

Would I be wise to accept this offer and use the money to pay off half the mortgage and have the remaining amount of £15,000 as a repayment over the next 7 years?

beanybop

Hi Vanessa

It is worth working out what you would pay out in premiums over the time remaining on the endowment.

Then see that paying off the lump sum if £16000 off the mortgage you will reduce your repayments or term by what sum/time.

You need to factor in some life cover costs somewhere, as the endowment includes this.

Then see if you will be better off. Remembering of course that you cannot tell by how much your endowment will underpay by, but try with the high and lower amounts and see what you come up with.

I have just done something similar with mine, and have decided to cash one in by selling it, and I am going to make the other one paid up.

Regards

Karen

EdInvestor

Hi Vanessa

I would suggest caution in the case of dealing with Integrity.

AFAIK they do not pay you until they have found a buyer, which may take some time.They also charge some kind of a fee over this period, so that you can end up paying them.

Have you received offers on this policy from any other TEP traders? FP policies are not usually marketable these days I understand, and an offer that is much higher than the surrender value is also grounds for suspicion. I would suggest you see if any other offers are forthcoming before getting involved with Integrity.

Post some more details about the policy for a view.

Guaranteed sum assured
Declared bonuses
Up to date surrender value
Monthly premium