Endowment question

liney

I have an endowment with Norwich Union of which i pay £66.40 per month and have done for 8 years as of June this year (maturity date 2023)

Guaranteed sum assured is £15300.
Bonuses £1949.30
Surrender £5381.58
Projected maturity values - getting back to be although growth of 6% was a mid figure in last years paperwork and havent had this years yet.

Questions are a) if nothing was added but i continued to pay, would i get both GSA and Bonus or just the 15k.

And b) as my mortgage is no longer linked to this and i have paid in about £6200 would you be inclined to cash it in and why.

Thanks for helping. They really shouldnt sell 18 year olds endowment policies )

Liney

liney

Any opinions please?

dunstonh

NU certainly have the potential to hit target and provide surplus. The one you have appears to be the older version which doesnt offer fund switches (shame) but this one could come right quite nicely. Of course, being an investment, it could go down as well as up.

EdInvestor

What are the projected maturity values @4% and 6%?

If you cashed it in and put the money on deposit @4% you should get a guaranteed 29,656 at maturity.

So we need to see how much better (or worse) you're likely to do if you keep taking the stockmarket risk.

liney

Projected for 4% is 27400.00
Projected for 6% is 34500.00

They say that growth was 14.6% for 2005 though..

EdInvestor

NU is a reasonable provider so it might make 6%.

But look at the difference between their 4% (27.4k) and a bank's 4% ( 29.7k).That's what you're paying in charges and life cover.

If you still have a mortgage I'd cash it in and use it to reduce the amount owed - you'd get something like a 5% return, which would be equivalent to their 6% as no charges.And of course, no risk either.

dunstonh

NU's potential is certainly at the 6-8%p.a. mark. If you accept some investment risk then you have to consider that 6-8% is within its range and surrendering it, paying a penalty, getting alternative life cover (which Ed has treated as charges) could mean that its better staying put with NU.

If life cover is no longer needed (as you do mention its not linked to mortgage any more), then there is little point paying for that and alternative investment options exist (ISA) which could be better.

EdInvestor

dunstonh wrote:

getting alternative life cover (which Ed has treated as charges)

No. I said

But look at the difference between their 4% (27.4k) and a bank's 4% ( 29.7k).That's what you're paying in charges and life cover.