Help with how my nu policy is doing please

ragdoll

I have a Norwich Union policy which I am trying to decide if I should keep or surrender. Not sure what details are needed but will supply what I have got:-

this is my yearly statement prepared july 2005 showing 2004 bonus
start date 13/7/1988
end date 13/7/2013
minimum life insurance amount £10,718
regular bonus added 31/12/04 £39.20
Regular bonus from previous years £7,839.99

It was taken out to pay off £37,450 but we converted to part repayment a couple of years ago so only needs to cover £19,013.

We have complained to NU and have got a letter offering a payment of £5405.21. With this figure we can either keep or surrender the policy. The only thing we don't have is a surrender value, I will get that today.

P.S Big thank you to this site for making me brave enough to write a complaint letter.

ragdoll

Have asked for a surrender value today, it will take 3 working days to come, but has anybody got an idea of how to work out if it is worth keeping.

EdInvestor

Not until we have the S/V.It would also be helpful if you can say which WP fund the policy is in - Norwich Union, Commercial Union, General Accident or CGNU.

ragdoll

Thanks EdInvestor, the surrender value is £14,586 and it was originally a Commercial Union policy but all paperwork is now from NU. I thought it may help you to know that our monthly payments are £58.98. I am assuming that the life assurance amount and the regular bonuses are definite and could not go down, we would then add on any future yearly bonuses. Would we also get a terminal bonus amount? And would need to take into account the monthly payments.

EdInvestor

Hi ragdoll

If you cashed it in and put the proceeds on deposit@4% also paying in the premiums to maturity, you should get 24,907, and of course this is a guaranteed cash return.

The guaranteed return on the policy is 18,557. According to NU's terminal bonus table, it looks to me like you might expect c.5180, for a total of 23,737 which is less than what you would get in the bank, and of course also involves risk.

So unless you need the life cover, I think I would tend to wish this policy well and despatch it on its last journey to the great endowment graveyard in the sky.;)

ragdoll

Thanks again,

Finance & I do not go together so your input is very much appreciated! Deep down I know that we need to surrender, but in a strange way it makes me sad, we had such high hopes when we took it out, the advisor made a cruise in retirement seem very appealing!

Nu say they will pay costs to our lender for converting our mortgage to repayment (it is currently 20k interest and 30k repayment) and also pay any redemption penalty if we pay off a lump sum. I think we will pay off a lump sum and see if we can reduce the mortgage term (we had to increase the term back to 25yrs when we went part repayment), we have had the worry of an endowment for so long it would be nice to have a repayment mortgage.

One last question, any idea how much life cover is?

EdInvestor

Deep down I know that we need to surrender, but in a strange way it makes me sad, we had such high hopes when we took it out, the advisor made a cruise in retirement seem very appealing!

I quite understand. In a way, endowments are a symbol of a time when people were much more naive and trusting - and much easier to cheat as a result. We know now that there is no such thing as a free lunch and we need to keep our wits about us when buying financial products - just like we do with other purchases. I can't help but think this is an advance.

One last question, any idea how much life cover is?

Much cheaper than it used to be, partly as a result of the above. :T

I don't follow latest prices (see elsewhere on the site), but Tesco used to be a cheap provider.

dunstonh

Tesco stopped using NU a few months back and brought it in-house with Direct Line. They stopped offering guaranteed premiums on CI and in general is not on par with the old NU life assurance policy.

EdInvestor

Thanks for that update.

Here's the link to Martin's latest review

payless

EdInvestor wrote:

Hi ragdoll

If you cashed it in and put the proceeds on deposit@4% also paying in the premiums to maturity, you should get 24,907, and of course this is a guaranteed cash return.

The guaranteed return on the policy is 18,557. According to NU's terminal bonus table, it looks to me like you might expect c.5180, for a total of 23,737 which is less than what you would get in the bank, and of course also involves risk.

So unless you need the life cover, I think I would tend to wish this policy well and despatch it on its last journey to the great endowment graveyard in the sky.;)

according to the link you give, the TB is based on the original sum assured ?? -

however of course current annual and terminal bonuses may differ, plus you might have the "potential" of a "Mortgage Promise"

http://www.norwichunion.com/library/pdfs/gn07059.pdf might be worth reading ...

dunstonh

Note that Martins article is a little out of date now and doesnt include pension decreasing term assurance which could be cheaper in a number of circumstances than normal decreasing term assurance.