Another endowment surrender question!

MM2005

Hi there

I'd appreciate your advice/confirmation on surrendering the 2 Standard Life endowment policies we have. Obviously we would wait until the demutualisation goes ahead (if it does) as we have a decent allocation of shares (about 1500 in total but the main bulk of this is from a pension my wife has had since the 80's)...

Summary of endowments are:
July 1990 - 25 year endowment for £26,050 @ £33.82 per month.
November 1994 - 21 year endowment for £21,188 @ £42.24 per month.

Just checked the values etc. on the Standard Life website and surrender values are:

(1990) - £7648 (Actually paid in approx. £6500)
(1994) - £6425 (Actually paid in approx. £6100)

Future projections for 2015 maturity are:

(1990) - 3.75% = £13,600 / 5.5% = £15,600 / 7.25% = £17,900
(1994) - 3.75% = £12,800 / 5.5% = £14,600 / 7.25% = £16,600

But I'd have paid in (in total) by then (approx):

(1990) - £10,700
(1994) - £10,200

1994 was a Homeplan produect but the 1990 one was a 'Minimum Cost 80' product. Now, I can't remember - it's been a long time! - whether that meant it was low start and I've paid in less. So, obviously that would affect the sums to some degree.

Does it make sense to surrender these? There isn't much between what we'd have paid in by 2015 and the lowest return values. Even the mid values I guess we could match/beat by a normal savings account? I actually have just started an offset mortgage with YBS so I am trying to pile as much cash into the offset account. I am a hgiher rate tax payer.

I'd appreciate your comments on the above and whether you agree I should cash it in. I'd obviously be adding to my offset fund and also saving nearly £80 per month in payments which again will boost the offset over time.

If I've missed any required details for anyone to make calculations or help with anything then please let me know.

Your anticipated help is much appreciated!

Cheers
Mo

ps. Just to add that I packed the related mortgage products in in 1999 when I started receiving the red letetr alerts! I have since claimed compensation but only received £800 ish - better than nothing and since I had already made other provisions I wasn't too fussed.

EdInvestor

MM2005 wrote:

Future projections for 2015 maturity are:

(1990) - 3.75% = £13,600 / 5.5% = £15,600 / 7.25% = £17,900
(1994) - 3.75% = £12,800 / 5.5% = £14,600 / 7.25% = £16,600

On No 1, if you sashed it in and put the money on deposit@4% also paying in the premiums to maturity you should end up with 15,296.

With no 2, same principle, the end result is 14,593.

I'm afraid Standard is likely to pay out at the lower end of the projection range, so assuming no additional penalties are imposed post DM (resulting in a substantial cut in the surrender value), the sensible thing to do would be to surrender and use the money to offset the mortgage as you suggest, which should also give you a higher return than 4%.

payless

But suppose you also need to decide if you put any value on the " mortgage promise" that may be attached

MM2005

Cheers Ed - it's what I thought. Payless - this mortgage promise seems to change whenerv they feel like it! It's more like a Mortgage Maybe, so I don't hold out much for that. I think that would be a risk not worth taking holding out for that - unless I've misread what they're saying!

EdInvestor

I'm afraid the mortgage promise has been a dead duck for quite some time

MM2005

One other thing - would I be able to sell these policies nowadays? Or do they not return anything gerater than the surrender values since SL policies went belly-up? If it was worth selling do you recommend a course of action for this (eg. privately, agencies)? I wonder if the DM would have any affect (good/bad) on the policy values for selling?

MM2005

Can anyone confirm whether anyone buys (or would be buying) SL endowment policies these days? Or is surrender the only option?

EdInvestor

Try this website for quotes

https://www.tepexchange.co.uk

MM2005

Any other website for quotes? I entered details of both policies on the TEP one - one policy didn't receive any quotes, the other was about £100 more than surrender value which to be honest, I'd rather just surrender for that minimal amount. I thought maybe with the DM that SL policies might gain a bit of interest. Dunno if the increased share price would help in this case? Looking at my details provided above does anyone reckon I'd receive anything over and above the surrender values?

thomasperfecto

MM2005 wrote:

Any other website for quotes? I entered details of both policies on the TEP one - one policy didn't receive any quotes, the other was about £100 more than surrender value which to be honest, I'd rather just surrender for that minimal amount. I thought maybe with the DM that SL policies might gain a bit of interest. Dunno if the increased share price would help in this case? Looking at my details provided above does anyone reckon I'd receive anything over and above the surrender values?

https://www.apmm.co.uk
They have a list of members you can try.

MM2005

thomasperfecto wrote:

https://www.apmm.co.uk
They have a list of members you can try.

Thanks for that - I've submitted details on the two policies we have. I'll see what/if they offer anything and either sell/surrender as required. Thanks again.