Surrender/Shortfall - IMPROVEMENTS !

castle96

L&G policy 21 yrs gone out of 25 - £61 p/mth £39000 sum insured

SV -11/08 £15866
5/09 £15267
8/09 £16463

Shortfall at6%

7/09 £14510
8/09 £14110

Might be worth carrying on/waiting a while, before surrendering ? if the SV is going up like this ??

Terminal bonus down to 81% from 109% last year - doesn't look good forthe long term ...?

dunstonh

Surrender values often do improve as you get closer to maturity as they include a penalty that typically reduces as you get closer to the end or is even removed fully at some point.

The change in surrender value may not be down to performance but down to reduction in charge. Although things have improved recently so it could be that as well. You should be able to tell by looking at the current value (if unit linked) or current position (if with profits).

castle96

thanks - what do you mean by "current value"

I have the 4/6/8% projection, I have the surrender value, so what is "current value" ?

thanks

dunstonh

unit linked plans have a current value and surrender value. Conventional With Profits plans cant really product a current value as they were not designed to work that way. So, you have to look at the basic sum assured, plus annual bonuses to get the guaranteed "current" value and then add the terminal bonus on top to see what the current position is. You compare these figure to see if the real value is going up and down. Not one that may be adjusted due to reducing surrender penalties.

castle96

thanks, I see
but
the terminal bonus is an estimate/not payable til the end, so how can you include that in the 'current' value ?

dunstonh

the terminal bonus is an estimate/not payable til the end, so how can you include that in the 'current' value ?

Its not an estimate. Its the current position. It could go down and it could go up but it needs to be included for you to get a real indication of the current returns.

Investments always go up and down in the interim of you investing and taking the maturity. Your pension, long term savings etc are exactly the same. A running value is just an indication of where it currently stands. Not where it will stand in future.