Endowments SELL or KEEP?

morejobs

Hi
We currently have three endowments (Flex Mortgage Plus) that are falling short (no surprise there!). We have been through system/ombudsman with no luck so are now wondering is is best to sell/cash in these and use money to pay some of mortgage off. We currently have most of mortgage now on a repayment with 30K on interest only. We are both in our mid fifties and are obviously looking to retirement in near future.

We have paid in about 11 years and have 11 years left on these policies and have been quoted surrender values of 6080, 7652, and 1520 (Total £15,252)

We have calculated that we will have to pay in a further staggering £19,958 give or take (154.87 a month). As you can see even without interest etc we are £4700 short of what has been paid in already. I assume that the surrender values are less than those at maturity but even so it leaves us with a dilema?
I am sure this question has been asked many times but in this current climate does anyone know what our options might be?
Many thanks for any forthcoming ideas

Conrad

All these threads perplex me. Has it occurred to anyone on this forum that companies want to buy these endowments for a very good reason..............

IE - because they expect to make money out of them

morejobs

Do they want to buy them ~????
I have certainly not made any out of them and they definitely won't pay the mortgage.
Any real advise would be welcome.

EdInvestor

Not very easy to sell endowments these days.
https://www.apmm.org

Post some more info

Providers of endowments
Guaranteed sum assured
Declared bonuses
Surrender value
Monthly premium
Maturity date
Maturity forecasts
Interest rate(s) payable on mortgage(s)

morejobs

Provider: All Norwich Union (Aviva)
.........................Policy 1, .......Policy 2,.. Policy 3
.................Flex Mortgage plus,.FM Plus..Guaranteed Min Cost End
Monthly Premium,.... £80.01 ,...£69.36, .....£5.01
Guarant'd Sum A, ....£31,500, ..£35,000, ..Unsure?
Current Sur Value....£7640.02, £8961.82,..£1520 ish
Mature in, .............2020, ......2020,........ 2013
Maturity Forcasts
4% .....................£17,100 ....£18600 ........£?
6% ....................£20900 ......£22600 ........£?
8% ....................£25400...... £27500 ........£?
Current Rate on Mortgage
90K ish repayment
30k Interest only
6.29% Fixed until end of this month reverting to 2.9%
We are currently renegotiating
Hope this is enough detail (it took some finding)
Many thanks

EdInvestor

morejobs wrote: »

Provider: All Norwich Union (Aviva)
.........................Policy 1, .......Policy 2,..
4% .....................£17,100 ....£18600 ...
6% ....................£20900 ......£22600 ........
8% ....................£25400...... £27500 .....

If you surrendered the two larger policies now, using the lump sums to reduce the mortgage @2.9%, also increeasing the monthly mortgage payment by the amount of the endowment premium (thus overpaying the loan), then your total return at maturity on policy 1 would be £22,887, while on policy 2, it would be £22,988.

That's beats their 6% projections =which is what Aviva is expected to return over the period - but with no risk to you.

There wouldn't appear to be much point in hanging onto these policies unless you need the life cover. If one of them is due some orphan assets money (next year?) itmay be worth waiting for that to come in, but the surrender value may drop over the period, negating the gain.

dunstonh

without knowing the mortgage promise value it is impossible to say if its worth keeping them or not. So, what is the mortgage promise values on these endowments?

the mortgage promise value is not included in the projections but added on to them when it matures. Some mortgage promise values have been higher than £10k so it is important to know what you have. Otherwise any opinion on whether to keep or dump will be based on incorrect information.

EdInvestor

But always bear in mind that the mortgage promise is not guaranteed (rather like the orphan assets distribution......:rolleyes: )

dunstonh

EdInvestor wrote: »

But always bear in mind that the mortgage promise is not guaranteed (rather like the orphan assets distribution......:rolleyes: )

Although it is fully funded and Aviva are paying it on all current maturities and there isnt the slightest hint they are going to pull it.

morejobs

Thanks for all of the feedback which is very helpful.
I have trawled the two policy docs but cannot find an actual figure for the promise. However there are examples of "Our promise to policyholders" which says that if they earn less than 6% each year then after tax that they will pay a maximum of £5000 (I assume for each). Having said that I don't think my wife opted to switch to a With Profit Fund that would make us eligible? This is a little unclear and I will need to ask her when she is around tomorrow.
Is this the mortgage promise you are refering to?

Thanks

dunstonh

The promise values were on the 2001 and 2004 statements. They are also given out on request. THe figure was based on the 6% shortfall in 2001. So, the £5000 you mention sounds like it could bt it.

Having said that I don't think my wife opted to switch to a With Profit Fund that would make us eligible?

The promise was on the product, not the fund.