NEED TO SURRENDER ENDOWMENT - HELP !!!

WNAT

WE CURRENTLY HAVE AN ENDOWMENT WITH NORWICH UNION. WE HAVE HAD IT FOR 11 YEARS, AND IT HAS 13 YEARS LEFT. IT WAS (ORIGNALLY) FOR A TOTAL OF £33,900.

LAST YEAR WE DECIDED TO MOVE TO A RE-PAYMENT ONLY MORTGAGE, AND DECIDED TO KEEP THE ENDOWMENT AS A SAVINGS PLAN, BUT NOW HAVE DECIDED TO SURRENDER IT AS WE NEED TO REPAY SOME DEBTS, AND THIS IS THE EASIEST WAY.

I KNOW THAT THE FIRST STEP IS TO WRITE TO NU AND ASK FOR THE CURRENT VALUE AND SURRENDER VALUE, BUT ON TOP OF THIS I KNOW THAT YOU CAN SELL YOUR ENDOWMENT TO OTHER COMPANIES, BUT DON'T KNOW WHERE TO GO FROM HERE.

ANY HELP AND ADVICE WILL BE MOST APPRECIATED !!

THANKS

NATALIE

zx2011

Try "The Association of Policy Market Makers (APMM)"

https://www.apmm.org

Make sure that anyone you deal with is regulated by the FSA. Don't forget to take into account the cost of replacing life assurance if it is still required.

MarkyMarkD

I don't think your signature panel is adding any value, Nix. Why not remove it?

Anyway, to answer the question, yes it's normal. People don't understand bonuses or sums assured on endowment policies at all.

The sum assured is the amount you are guaranteed to get at maturity. Bonuses added to the sum assured are additional guaranteed amounts which you will received at maturity. Both amounts are dependent on maintaining the policy until its original maturity date.

So of course you don't get the bonuses if you surrender early.

And people who hold to maturity are going to suffer shortfalls against target value. How do you imagine that you deserve an extra "bung" to say sorry, when you're getting out early, whereas those who stick it out to the bitter end will not get such a bung?

DavidLaGuardia

PAID UP POLICIES

For those who don't need the money now but do not wish to continue paying the endomwnet premium, look at the option of making the endowment paid up. This means you wait untill maturity for a reduced amount. It can often look more attractive than surrender and if someone is offering more to buy it they are only doing so to make a gain from YOUR loss.

Nix

Mark,

Removal of signature panel - will do when YaBB lets me! >:(

Silly me, there I was thinking that when NU told us that these bonuses have already been accrued, we would be entitled to them. To clarify, I was only expecting the present bonus amount, NOT the full term bonus accrual.

And people who hold to maturity are going to suffer shortfalls against target value. How do you imagine that you deserve an extra "bung" to say sorry, when you're getting out early, whereas those who stick it out to the bitter end will not get such a bung?

Why willingly hold on to maturity when you suspect that you'll suffer a massive shortfall? Judging by our experience yesterday with our lenders, swopping over from 'interest only' payments to repayment took approx 1 minute, no hassle what-so-ever. I honestly thought that there would have to be income reassessments, etc but no! Now, at least, we have peace of mind and I would recommend it to anyone who find themselves in the same position.

DavidLaGuardia,

We thought of that very possibility but worked out that if we used our surrendered endowment as a one-off payment towards our new repayment mortgage, it saved us nearly 6k in interest and it would be paid off 3 years earlier. A no brainer as far as we were concerned.

NB Watch the market boom now.... :-/

MarkyMarkD

Mark,

Removal of signature panel - will do when YaBB lets me! >:(

Thanks!

Silly me, there I was thinking that when NU told us that these bonuses have already been accrued, we would be entitled to them. To clarify, I was only expecting the present bonus amount, NOT the full term bonus accrual.

I think I thought that was what you meant - but they still hadn't been accrued in quite the sense you thought. Like I said, most people don't understand endowments. They seem to be intentionally opaque financial instruments.

Why willingly hold on to maturity when you suspect that you'll suffer a massive shortfall? Judging by our experience yesterday with our lenders, swopping over from 'interest only' payments to repayment took approx 1 minute, no hassle what-so-ever. I honestly thought that there would have to be income reassessments, etc but no! Now, at least, we have peace of mind and I would recommend it to anyone who find themselves in the same position.

Why willingly hold on to maturity when you suspect that you'll suffer a massive shortfall? Because the reason for that shortfall has already happened, to a large extent. And the surrender values already reflect the impact of those causes.

OK, you might not get a decent rate of return on the endowment in the future, as you've failed to get in the past. But equally likely, you may do.

I'm not sure what peace of mind you gain by crystallising a loss. Others might think that they would be no worse off by holding on, and seeing what sort of loss arises at maturity, whilst in the interim converting their loan (or the part relating to the projected shortfall) to repayment.

By surrendering, paying the surrender value off the loan, and converting the loan to 100% repayment, you are making the assumption that investment returns, starting from an artificially deflated surrender value, will be less than the compounded interest rate on your loan.

As you can easily keep your mortgage sub-5% at the moment (even on a long-term fixed basis, if you were so inclined, or by remortgaging between best-buy discounts), that's a fairly easy rate of return for the endowment to beat, IMHO.

I am personally opting for the "hang in there" approach with my endowments. I may well live to regret it. You may well live to regret surrendering. But it's a decision we each have to make for ourselves.

Nix

Yup, each to his/her/its own!

The world's a fragile place right now and I'm personally convinced that todays market is not a place for gambling. It doesn't seem to take much to make it wobble these days, aye?

My peace of mind is that I know exactly where I stand, mortgage-wise, in the full term. And don't forget that not only are my monthly payments less but it gets paid off sooner. Sometimes you do have to cut your losses in battle in order to win the war.

I can only wish you the very best of luck, my friend!

MarkyMarkD

And don't forget that not only are my monthly payments less but it gets paid off sooner.

Normally one or the other, but I suppose you could have a bit of each.

If you just switch from interest only to repayment, surrender the endowment, and pay the surrender value off the loan, then your payments would be a fair bit lower if you leave the term alone.

If you choose to leave the payments somewhere mid-way between what they were and what they are now, you could reduce the term and your effective payments, I suppose.

But you could have done that without surrendering the endowment - it's just over-paying the mortgage, isn't it?

Nix

But you could have done that without surrendering the endowment - it's just over-paying the mortgage, isn't it?

Very true, and that's what we were doing, but it gets to the stage where you really don't trust anything to do with endowments - their market reliance and the companies themselves. We shouldn't have to be in a position to have to overpay the mortgage. Two years ago, we held on to the idea of the endowment when NU said, " Subject to certain conditions you may receive up to a maximum of £8,000 under 'Our promise to policyholders'. ". Well, not only is our potential deficit growing ever larger but, when questioning them last week about this 'promise', it transpires that they can withdraw this promise at any time albeit with reasonable warning. So much for promises! >:(

I can do without wishy washy performances and promises. This is MY money they're playing with, if I let them. Their priority is with their share holders and profit margins, mine is making sure I pay off the biggest debt I've ever had. That's why I'm taking more active control.

Ahhh, peace of mind..... ;D

Nix

dougk_2

Don't forget the endowment also has an element of life assurance , which you would be giving up!

Thats why I don't consider my endowment as that bad a deal - yes it might not make as much as expected but , I still get more than I paid and life assurance as well.

To be honest when you consider that most endowments out there are for what I would now consider small amounts (20-40k) in comparassion to current house prices it doesn't bother me much!