Dubious endowment: should I keep on paying, or ...?

Voyager2002

Hi,

I have an old endowment policy that was designed as a form of saving (actually as part of pension planning). I don't think it is performing very well, so I wonder whether I should continue to pay the premium each year, or do something else.

I was given some details in June 2003. At that time, the surrender value was 2,899.90; the Sum Assured was 5,319.00 with Reversionary Bonuses at January 2003 of 3,149.00; and the projected maturity values (based on growth of 4 % or 8 % p.a.) were 8,460 and 15,100. At the time, 18 more premium payments remained to be made. The annual premium is 150 pounds.

Any thoughts please?

dunstonh

Company its with and version of with profits fund (if applicable) and do any guaranteed rates apply?

Voyager2002

dunstonh wrote:

Company its with and version of with profits fund (if applicable) and do any guaranteed rates apply?

Whoops!!

The company is AMP London Life. None of my correspondence with them has mentioned any guaranteed rates, nor specified a particular with-profits fund.

dunstonh

AMP have dumped London Life before selling off all their assets and bleeding them dry and in turn making a right pigs ear of things and retreating back to Australia.

London Life is now on its third owner in 3 years and currently owned by a venture capital company. Prospects are not good I'm afraid. Looking into my crystal ball and making some assumptions based on the financial strenght of the Pearl Group, I would assume zero or minimal bonus for the next ten years. Those 4% and 8% projections are completely useless to you.

In fact, if you take the current bonus' paid and add it to the basic sum assured, that is likely to be the maturity value.... have I painted a bad enough picture for you yet?

EdInvestor

Voyager2002 wrote:

I was given some details in June 2003. At that time, the surrender value was 2,899.90; the Sum Assured was 5,319.00 with Reversionary Bonuses at January 2003 of 3,149.00; and the projected maturity values (based on growth of 4 % or 8 % p.a.) were 8,460 and 15,100. At the time, 18 more premium payments remained to be made. The annual premium is 150 pounds.

Any thoughts please?

Had you surrendered it in 2003 and put it on deposit @4% also paying in the premiums until maturity you would have received 9,467 at maturity.This compares with the guaranteed value at the time of 8,460 and the virtually identical projected maturity value @4% of 8,460. As they make clear,it's very unlikely there will be any terminal bonus on top of the guaranteed value at this provider.

If you'd like to update the surrender and guaranteed values we can do the calculation again so you can have a clearer view about the way forward.As DH says, surrender remains likely to be the best bet.

Voyager2002

Thank you to both of you: not what I had hoped to hear, but more or less what I had expected.

Any thoughts about pursuing compensation for mis-selling? The complication is that it was not me personally who bought the policy: I was a VSO volunteer, and at that time VSO paid endowment premiums for the serving volunteers (and for a couple of years afterwards) to build up a sum to put towards a pension. So my only decision came when I knew that a policy in my name was already running, and I had to choose whether to continue the premiums or surrender it, and at that stage any surrender value would have gone back to VSO. At one point I rang them to ask if they had or were likely to investigate the possibility of mis-selling, but they never returned my call...

EdInvestor

If nobody sold it to you, you won't be able to claim you were mis-sold.