Time to cash in my Standard Life Endowment?

Beverley

I have a Standard Life Endowment Policy. It was in joint names but my ex-husband agreed to reassign it to just me and the paperwork has been sent off to Standard Life.

As he was the first named on the policy, any share allocation will be to him (a source of great irritation to me as I've paid this policy for the past 8 years since we split AND, if my solicitor hadn't messed me about, I'd have had this all sorted by last summer - well within the deadline)

Anyway, I've remortgaged the house and now have a repayment mortgage so the policy is no longer linked to a mortgage. I was intending to use it as a savings policy but am wondering if I might be better off just cashing it in.

It was taken out in July '87 and was linked to a £30k interest only mortgage - I've paid £38.80 per month since then. It matures in July 2012.

total current value on 1st feb 2006 £12,866.65
amount payable on death £30,000
minimum amount payable at maturity £17,356.57

Should I cut my losses and cash it in now or hang on?

Any ideas?

Beverley

Ian_W

There may be a
BIG +
in trading it in now as I believe if the policy is surrendered before the AGM your ex won't get their windfall. :rotfl:

However, there have been suggestions here and I think in some papers that SL may be offering some options to wp holders to prevent a mass exit. If you still want a savings vehicle it may be worth waiting a while. :rolleyes:

Close call?

Beverley

Thanks for this Ian

I had no idea SL were considering a sweetener.

It seems that SL are not aware of his whereabouts and if he doesn't get in touch he'll lose out anyway.

I'll hang on and see what happens

Beverley

Ian_W wrote:

There may be a
BIG +
in trading it in now as I believe if the policy is surrendered before the AGM your ex won't get their windfall. :rotfl:

However, there have been suggestions here and I think in some papers that SL may be offering some options to wp holders to prevent a mass exit. If you still want a savings vehicle it may be worth waiting a while. :rolleyes:

Close call?

dunstonh

The suggestion from the SL board is that they would allow switches to their unit linked fund range (which is actually very good and includes a number of external managers) without incurring any cost. Whilst details are not known, it is expected that a penalty period (like a tie in) would apply to that switch to stop people abusing it.

teecee90

Before cashing in consider two other options:

1) Make a claim for compensation if you think you were mis-sold

2) See if you can get a quote from a broker to buy the policy from you.

dunstonh

options are:

1 - keep
2 - make paid up
3 - switch investment funds
4 - surrender
5 - sell

each can have advantages to different individuals.

Beverley

teecee90 wrote:

Before cashing in consider two other options:

1) Make a claim for compensation if you think you were mis-sold

Thanks but as we bought it in july 87, it's before the cut off date. I've been told that it's pretty pointless even trying to claim as the onus would be on me to prove that I was mis-sold rather than it being on the seller to prove I wasn't (which is what happens after the 1988 cut off date). I don't have anything that could prove this.

2) See if you can get a quote from a broker to buy the policy from you.

Hadn't considered that - thanks

Beverley

Milarky

Beverley wrote:

I have a Standard Life Endowment Policy. It was in joint names but my ex-husband agreed to reassign it to just me and the paperwork has been sent off to Standard Life.

As he was the first named on the policy, any share allocation will be to him (a source of great irritation to me as I've paid this policy for the past 8 years since we split AND, if my solicitor hadn't messed me about, I'd have had this all sorted by last summer - well within the deadline)

Anyway, I've remortgaged the house and now have a repayment mortgage so the policy is no longer linked to a mortgage. I was intending to use it as a savings policy but am wondering if I might be better off just cashing it in. (Oh yeah! 'valuable life insurance', that's the one. Better check to whose benefit that money would be paid.)

It was taken out in July '87 and was linked to a £30k interest only mortgage - I've paid £38.80 per month since then. It matures in July 2012.

total current value on 1st feb 2006 £12,866.65
amount payable on death £30,000
minimum amount payable at maturity £17,356.57

Should I cut my losses and cash it in now or hang on?

Any ideas?

Beverley

So no 'free shares' then... sorry about that. Looking at your numbers they are just about one and a half times my qualifying amounts (£8942..£20000..£11800..premium £25...July 1987...July 2012) so he'll get about 820 shares by my estimate. Can't you extract this from your settlement from him anymore?

[Revenge!! An evil thought, but if you surrender before the ballot - 28th May - would he then lose his shares? Anyone? If that's an option open to you it's a form of legal blackmail is it not? You tell hubby if he want's the free shares he'll have to give you the half the monetary value. A bit drastic, I know but you must have thought of this?]

On the merits of keeping your policy - one in exactly the same position as mine is - it will 'grow' at a 'guaranteed' minimum rate of 1.56% - which is just the interest rate equivalent of the present value plus the remaining premiums until July 2012 (6 and a bit years) - to take it up to the 'at maturity' value given. Last year's bonus added about £65? - times six years that is another £400 at payout. This would raise the equivalent return to the startling rate of 1.95% - scarely any better. Final or terminal bonus needs to be added to these sorts of sums to get to that payout to anywhere near the 5.5% (?) you could reckon to save just by paying down your mortgage instead with the surrender value plus premiums. This final bonus would need to be at a rate of 24%. Well I think that's possible in the current climate but it's a hymn and a prayer in comparision with the relative certainty with which you can enjoy savings on your mortgage (Remember also that if mortage rates do go down so do likely investment returns - so the comparison remains valid over a range of rates)

I may have missed something but I can't see any advantage in standing by this policy whilst your ex collects free shares which for the last eight years he has not made a direct financial contribution.

Beverley

dunstonh wrote:

options are:

1 - keep
2 - make paid up
3 - switch investment funds
4 - surrender
5 - sell

each can have advantages to different individuals.

Wow I had no idea there were so many

I guess if I keep I am at least guaranteed the £17k even though that will mean me paying out a further £2.9k to get that

Not sure what paid up means - does that mean that I stop paying the £38.80 per month but leave it alone to (possibly?) accrue more interest/profits?

How would I switch investor funds - what does this mean?

I think surrender means I just take the current surrender value of £12.8k and walk away

The last option means I need to contact someone to sell it to - a broker? Where do you find brokers? How do you know who is a good/honest broker

Lots of questions - sorry

Beverley

PS I already have £12.8k and IF I only get the current guaranteed final amount of £17.3k at the end, I'll have taken a further 6+ years to pay a further £2.9k in order to improve it by about £1.6k - I know it could improve by more than that but I'm looking at my worst case scenario when considering my current debts of around £11k

EdInvestor

Hi Beverley

I've paid £38.80 per month
It matures in July 2012.
total current value on 1st feb 2006 £12,866.65
minimum amount payable at maturity £17,356.57

If you would like to ring up and get a surrender value we can take a look at whether or not it's worth keeping.

Post any maturity projections you have as well.

dunstonh

Not sure what paid up means - does that mean that I stop paying the £38.80 per month but leave it alone to (possibly?) accrue more interest/profits?

It can also avoid market value reductions and surrender penalties. It doesnt need to be made paid up until maturity either. It could just be a matter of holding on to the point where there are no penalties. If it costs 5k to surrender 5 years before maturity, then making paid up avoids paying that 5k and that should be considered as saving money, in a roundabout fashion.

How would I switch investor funds - what does this mean?

Many endowments have multiple investment funds of which you could be in just one. That is old fashioned investing and proven to be not very good and sods law is that you are in the bog standard default fund which is poor. Some of the providers alternative funds are very good and offer good future potential. If there are other funds, then usually you can switch to the other funds and get out of the duff one.