Endowment compensation...

reggie

We have an Axa low cost endowment policy and we have been offered compensation, now we don't know whether to surrender, sell or keep the policy. To be honest we still don't fully understand the factors involved as to whether it's a good investment or not.
Anyway these are the figures:
Gteed death benefit £13300
Basic sum assured £6636
Current fund value £5241
6 years left to run at £26.50 pm
Can anyone advise?

EdInvestor

Please also post the surrender value ( ring up and ask) and the declared bonuses.

reggie

Sorry, I put fund value - that is the surrender value. If I was to have the compensation and surrender the policy the sum would be £7026 - which makes the surrender value about £5200 - I assume inclusive of bonuses?

reggie

It's not so much the compensation figure as to what to do with the policy now - keep, sell or surrender. I will check that website out though - thanks.

EdInvestor

Hi reggie

Still need the declared bonuses amount.

reggie

Just rang AXA and was given the following figures - £5345 surrender value:

included in that is £350 terminal bonus and £168 reorganisation bonus - so taking away the bonuses the unit value is about £4825.

Are those the figures you meant? Not sure I know what they mean!

EdInvestor

reggie wrote:

Just rang AXA and was given the following figures - £5345 surrender value:included in that is £350 terminal bonus and £168 reorganisation bonus - so taking away the bonuses the unit value is about £4825.Are those the figures you meant? Not sure I know what they mean!

OK, we've got the surrender value.

Now all we need is the total of the annual, regular, declared,guaranteed bonuses ( they do have different names).You get one of these every year but lately they haven't been much - often as low as i-2%, even nil at some insurers

So what is the total of these attaching to your policy?

reggie

The only thing I can find at present - on a 2004 statement is the following:
'The company's current total regular growth rate is 3%pa.
Over the past 12 months the regular bonus rate for this contract was 0% pa. This bonus rate excludes the guaranteed interest rate of 3% pa.'
I'll have another look for a more recent statement. Are these the right figures? Do they help?!

EdInvestor

reggie wrote:

Over the past 12 months the regular bonus rate for this contract was 0% pa. This bonus rate excludes the guaranteed interest rate of 3% pa.'

Aha.It seems your policy doesn't have annual bonuses, but rather a guaranteed annual interest rate of 3%.On top of that, it will include free life cover.

On that basis you might as well keep it, since the return will be fairly similar to a cash account and you might get an extra bit on top as a terminal bonus.