Endowment policy is it worth keeping?? Financial advice Please.

BrumTina

Hi All,

Please could someone give me some advice regarding my endowment. Thankfully it is not attached to a mortgage anymore.

The details are:

Commenced 1991
Terminates 2016 guaranteed sum on maturity 10,890.00
Bonus earned: 3449.37
Current Monthly Payments £55.12 x 81 mnthly payments outstanding
Current Surrender Value to the endowment company. £8,931.00
The policy includes life assurance of 33,000

I can't afford to keep up the repayments, what should I do with it?

Struggle on with the payments?:( Will it be worth it?

Sell it? If so how? Who can I trust? :eek:

Freeze the payments for 12 months in the hope that I find work to pay the whole year back? This is what the company told me. The company are called Phoenix orginally Sun Alliance.

Any advice would be welcome.

Many thanks,
Tina.

suzzitom

Hi Tina,

We had a pheonix policy up until recently. in the same position as you as it was no longer attatched to the mortgage. We too had a surrender value which was thousands short to what they quoted 20 odd years ago.
We surrended it because the remaining payments to be made were not going to add any value even though we had 4 years left to run, they also said that they wouldnt be adding any bonuses to the policy and hadnt for many years. We made the decision to cash it in as it was throwing good money after bad.
From what you have said you wont gain from making another 81 payments either.
The downside is loosing the life insurance but it was only for the remainding 4 years.
Bear in mind they take forever to give you your money. They fob you off with 'your signiture doesnt match' etc etc.
Vitaly important photo copy everything you send to them you will know what I mean if you decide to surrender we had to ring them so many times and send so many extra documention is was untrue.

Good luck!

EdInvestor

Post a bit more info


Maturity forecasts
Interest rate on mortgage (even though it it not attached)

_bankrupted

For what it's worth I would surrender the policy and and take contol over my own investments.

Endownments policies are out of favour and I don't see this giving you any advantages over the life of your policy.

The other questions is exactly how is the policy value calculated?? Your monthly payments are paying the costs of the financial institution managing your policy. I don't see any transparancy of these funds. There are certainly costs associated with running them, as they continue to fall out of favour a smaller number of contributors are paying the costs of running the funds.

Is the life insurance element worth anything to you?? You are paying for this.

What is your attitude to risk?

Your investments is related to the stockmarket. Whatever growth we have over the next 6 years your policy is not going to receive that full growth. (far from it!!!)

I would be confident that if I surrendered the policy and invested in a tracker fund, 6 years from now I would be receiving a far greater sum that the maturity value!!

dunstonh

Endownments policies are out of favour and I don't see this giving you any advantages over the life of your policy.

They are certainly and correctly out of favour. However, that doesnt make them all bad and some can be worth keeping. There is no 100% rule that can be applied to keep/paid up/surrender/sell decisions. The facts need to be known and the plan analysed.

I would be confident that if I surrendered the policy and invested in a tracker fund, 6 years from now I would be receiving a far greater sum that the maturity value!!

What if there is a tracker fund available on the endowment?

BrumTina

EdInvestor wrote: »

Post a bit more info


Maturity forecasts
Interest rate on mortgage (even though it it not attached)

Thanks for your support



The charges that apply from 1 January 2009 are:

· An annual charge of 1.5% of the value of the investments underlying the policy. The effect of this is to reduce the investment return, which they take into account when calculating final bonus by 1.5% each year.

· A one-off charge against the value of the investments underlying the policy when it leaves the fund. This is 9.0% in the first half of 2009 and is expected to reduce by 1.5% each year until it reaches nil for policies leaving the fund from 2015.


Endowments table approximate equity:

Year of maturity 2016
25 year term 22%/21%

Any of the above doesn’t make much sense to me

Please help....

EdInvestor

You'll need to ring them up to ask for their forecast of the value of the policy at maturity assuming (usually) 3 separate growth rates, low medium and high. These are typically 3%,5%,7%


Do you still have a mortgage, if so what is the interest rate on the loan?

BrumTina

Hi EdInvestor,

My partner has a mortgage but our finances are kept separate. However the interest rate on his mortgage is 2.99% which is all he is paying at the moment nothing is comming off the capital because of our circumstances even though he works he can only afford to pay the interest and has an outstanding debt of 55,000 on the property, the end of term is approx 2017. So we really are in a financial mess but I am hopeful that I may find work soon.

My endowment is all I have - it was supposed to be my little nest egg for my future!

I have just phoned Phoenix who tell me that their growth rates are 2.75% = £14.300 and High 4.25% = £15.200 they only have two growth rates and these are not guaranteed.

Thank you so much for your support without it I would not have known what to ask when phoning.:T

HammersFan

Is it possible to make the policy 'paid up' i.e. stop paying in any more but don't surrender it. I am not 100% sure about this but I think then you will still get some of the bonus due at the end of the term. Check all of that out though!

BrumTina

scrooge_mcduck wrote: »

need to be 100% with profits. I couldnt sell it because it was part with profits/ part managed.

Thanks, I'll look into this.

Regards Tina.

BrumTina

HammersFan wrote: »

Is it possible to make the policy 'paid up' i.e. stop paying in any more but don't surrender it.

Thanks, I'll look into this.

Regards Tina.