L&G policy - sell, surrender or keep

silvercar

25 year with profit policy taken out 21/7/1986 matures 21/7/2011.

Surrender value in feb 2006 was 28115.80
Premiums now £70.30 per month (it was a low start policy so for the first 5 years premiums were lower)
Basic sum assured 15751
Guaranteed life cover 42800
current bonuses (includes 2005) total 13333.70.

keep, cash in, sell?

If I did surrender or sell I would need to replace the life cover, though our health has not changed except that we are now over 40!

homer_j_3

its like deal or no deal this.... lol. I am sure dunston wil be around at some point or Ed who seem to be the peeps that can tell you the realities your are faced with.

EdInvestor

Hi Silvercar

silvercar wrote:

Surrender value in feb 2006 was 28115.80
Basic sum assured 15751
current bonuses (includes 2005) total 13333.70.

Could you check your figures?

These ones suggest the surrender value (28,115) is almost the same as the guaranteed value (15,751+13,333 = 29,084) which seems unlikely.

silvercar

From the Dec 2005 bonus statement:

maturity date: 21/7/2011
basic sum assured: 15,571.00
Guaranteed life cover: 42,800.00 [this was the mortgage amount at the time]
existing bonus:13052.40
2005 bonus: 281.30
total basic sum assured and bonuses: 29084.70

Letter dated 14/2/06: "...the current surrender value (or cash-in) of your policy assuming no further premiums are paid is 28,115.80"

EdInvestor

Silvercar

If you cashed this policy in and placed it in deposit @4% until maturity also paying in the premiums you should end up with 38,854, compared with the guaranteed value of 28,115.

You should get some projections from L&G for the maturity values: it could be that there is a decent terminal bonus in this policy, which is why the surrender value is quite high.

This might mean it's worth holding on providing you don't mind a bit of risk.

silvercar

Thanks, the terminal bonus on policies maturing this year was 80%, but in 2002 and 2003 it was 29% and 41%. Can't find 2004 letter.

Based on 6% growth it is nearly on track (2,300 short) to pay off the 42,800 then mortgage.