reselling unit linked policy

fatheralice

Are there any endowment resllers that will deal with unit linked policies?

We have a unit linked policy with HSBC life, currently worth a surrender value of approx £11k, after 9.5 years of a 25 year term. Supposed to be worth £65K!
We have the option to surrender now ( but are wary of tax implications until year 10), but would be interested in reselling if there was a better deal.

Anyone know how HSBC unit linked policies (balanced fund) are performing? - is it worth keeping it going for a while longer?

We have been awarded compensation for mis-selling regarding this policy, and can surrender at this £11K figure for the next 6 weeks, or is the outlook better in the longer term?

dunstonh

Are there any endowment resllers that will deal with unit linked policies?

No..

We have a unit linked policy with HSBC life, currently worth a surrender value of approx £11k, after 9.5 years of a 25 year term. Supposed to be worth £65K!

If it is meant to be worth 65k over 25 years, then it would be around 1/5th of that after 10 years.

Anyone know how HSBC unit linked policies (balanced fund) are performing? - is it worth keeping it going for a while longer?

Not a great fund but last average returns over last 3 years has been 14.95%. HSBC almost certainly want around 7% p.a. so its been performing above track recently. 10 year performance is 5.01% which is below target but not unexpected considering the stockmarket crash which has been quite beneficial for you as it happened early in the term.

All in all, this endowment has a good chance of hitting target or providing a surplus.

We have been awarded compensation for mis-selling regarding this policy, and can surrender at this £11K figure for the next 6 weeks, or is the outlook better in the longer term?

Crystal ball job.

fatheralice

Thanks for your reply(s) dunstonh.

Nice to here that the endowment isn't as bad as we might believe!
As stated elsewhere, we have just changed to a 25yr repayment policy, but are in the position where we could keep or surrender the existing endowment plan - presumably once HSBC no longer have a claim on the mortgage, as it has transferred tio another lender, the endowment policy can still remain in place, only as a savings plan?

FIO We currently pay £100 pm to cover the endowment and life/ci cover.

From what you say, we may be advised to hold onto it for the time being at least.

dunstonh

Nice to here that the endowment isn't as bad as we might believe!

Projections you get are fixed rate. They are also from a given point. If that given point is at a time just after a stockmarket crash, it would show a potential shortfall. Over the last few years as the market has recovered, the shortfalls have been closing and many unit linked endowments have returned to surplus again. This is totally expected behaviour and nothing in itself to be concerned about with a 25 year unit linked endowment. However, because of the focus on endomwents and the short sighted incompetence of all those involved in looking at this issue, the whole thing was dealt with on current surrender values. These are usually the lowest possible value and does not reflect the potential of the policy correctly.

From what you say, we may be advised to hold onto it for the time being at least.

I wouldnt go as far to say that. We would need to know current values, surrender values, alternative funds available and ongoing charges.

Whilst the potential of the fund is there for it to achieve the original target, it is quite possible that the charges and limited fund selection mean you could redirect the money to an ISA investing in similar areas and end up with a better return. So, in effect, you are doing the same thing but cheaper. Equally, some endowments get the bulk of their charges out of the way at the start and then become quite cheap ongoing and that can make them worthwhile keeping if the fund selection is quite good. However, that fund selection is only of use it you utilise it. For example, x% into the european, x% into property, x% into UK Equity etc etc. If you stick 100% into balanced managed, then you are not utilising the available funds and balanced managed funds never seem to achieve what a "manual" fund spread does.