Endowment advice sought

stevenatleven

I have placed this in Investments rather than Endowments,because it does,nt relate to a property anymore and I have let it run purely as
an investment.

I have an old endowment with Clerical Medical which has 3 and a half years left to run.
The current surrender value as of today is £10165,in April 2008 the value was £9915 so it has only gained £150 in 20 months.
During that period of 20 months I have paid over £480 for a gain of £150!

I realise the market has been very volatile during that period but I wonder if it is best left for a further 3+ years where it is or cashed in
and put into an ISA or a bond where it might make a better rate.Or any other options that would do better.

The full surrender value with no penalties is £10165.
I pay about £24 a month to continue the endowment so as well as getting 4 or 5 % from a fixed term investment I would save a £1000 in payments to the endowment.

As always your comments are appreciated.

dunstonh

The current surrender value as of today is £10165,in April 2008 the value was £9915 so it has only gained £150 in 20 months.
During that period of 20 months I have paid over £480 for a gain of £150!

In a 20 month period that saw property drop 40-50%, stockmarket drop 45% and fixed interest sector drop 25-40% and even some cash holdings lost money. So, in the scheme of things, that seems quite good.

I'm guessing your exclamation mark is because you are pleased with how its done in such a bad period.

I realise the market has been very volatile during that period but I wonder if it is best left for a further 3+ years where it is or cashed in
and put into an ISA or a bond where it might make a better rate.Or any other options that would do better.

Crystal ball job. How do you know what option is going to be best going forward?

What are the alternative fund options available with CM? What are you in now?

sheslookinhot

Is there any likelihood that you would receive a final bonus on maturity of the endowment ?

stevenatleven

Thanks for the replies,I will look into the maturity bonus

dunstonh my exclamation mark was more about the disbelief of paying in £480 to get £150 back,but I think you know that.I realise it could have gone down
by 40/50% in the period but my concern with only 3 years left to run is that it would have to grow by more than 7% pa to better the fixed term rates plus my
monthly payments.

kostigovs

stevenatleven wrote: »

I have placed this in Investments rather than Endowments,because it does,nt relate to a property anymore and I have let it run purely as
an investment.

I have an old endowment with Clerical Medical which has 3 and a half years left to run.
The current surrender value as of today is £10165,in April 2008 the value was £9915 so it has only gained £150 in 20 months.
During that period of 20 months I have paid over £480 for a gain of £150!

I realise the market has been very volatile during that period but I wonder if it is best left for a further 3+ years where it is or cashed in
and put into an ISA or a bond where it might make a better rate.Or any other options that would do better.

The full surrender value with no penalties is £10165.
I pay about £24 a month to continue the endowment so as well as getting 4 or 5 % from a fixed term investment I would save a £1000 in payments to the endowment.

As always your comments are appreciated.

I'm no Financial Advisor but have you considered treating the policy as "paid up" thus saving yourself a further 3 1/2 years payments. It might be worthwhile contacting Clerical Medical to see how the current value of the policy would be affected if you chose to go down that route.

It's galling to be paying £300 a year and see so little apparent benefit

EdInvestor

Post some more info about the endowment

Guaranteed sum assured
Declared bonuses
Monthly premium
Maturity date
Maturity forecasts (ring up and ask for these).
Expected return (%) if cash is redeployed to other savings/investment

rupee99

Traditionally policies held to maturity have a better value than those surrendered, usually because of a final, or terminal, bonus. Before you make any decision see whether there may be a terminal bonus provided for in the policy terms and if so what the performance of Clerical Medical has been in the declaration of final bonuses recently (e.g. some companies have suspended them altogether, others have reduced them significantly, others have not done very much). In "the good old days" a terminal bonus could match or even exceed the sum of the annual bonuses, hence there was an active market in "secondary endowment policies" where someone would buy your policy for a sum greater than the surrender value, continue to pay the premiums and then collect the terminal bonus. There has been a lot less publicity about this recently and I don't know whether that market still exists.

DiggerUK

stevenatleven wrote: »

...........but my concern with only 3 years left to run is that it would have to grow by more than 7% pa

Your statement contains the solution you seek.
Do you, or do you not, think the economic situation will return you 7% plus in the near future.

Here is one recent article from The Financial Times that might help you make up your mind.
And yes, I am suggesting you cash in.

http://www.ft.com/cms/s/2/2622faba-ec0d-11de-8070-00144feab49a.html?ftcamp=rss

All the seasons best for you.

stevenatleven

Edinvestor,thorough as always.I will phone up tomorrow and get this info.
rupee99 and kostigovs,I will look at the paid up option and see if the market for selling on still exists,but can,t really see anyone wanting it if there was,nt some large final bonus attached to it.

DiggerUK thanks for the article makes interesting reading.
As you correctly devined I have answered my own question.The recent rally in the FTSE has probably restored the policy to some growth but I can,t see it continuing
like this for another 3 years so unless there is pot of gold at the end of the term I will take the cash and put it in the best fixed term bond I can find.

Many thanks once again

Steve

Tarama

Hi my situation is similar

I have 2 endowments and essentially I am retaining them for the same reasons and I would welcome any ideas around these.

The first is with Prudential/ which was Scottish Amicable and it commenced August 1990. Its current value is £18395.

Guaranteed sum assured - £12075
Declared bonuses - £6400
Monthly premium - £46.85
Maturity date - June 2015
Maturity forecasts
-4% = £23,300
-6% + £26,00
-8% = 29,000



The second is with Friends Provident and was commenced in 1997 to mature July 2015. It provides life cover of £57,533. Its value on 13.11.09 was £23391

Guaranteed sum assured - I cannot see anything on the literature re this
Declared bonuses - none that I am aware of. It states "We may pay a final bonus when you end your plan (this is something I need to check).
Monthly premium - £163.90
Maturity date -July 2015
Maturity forecasts
-4% = £38,700
-5% = £41,800
-8% = 47,200


many thanks

DiggerUK

stevenatleven wrote: »

.......so unless there is pot of gold

GOLD..........did somebody mention GOLD!!!

Time for a singalong.

http://www.youtube.com/watch?v=2zQr8Rwp1tk