Endowment compensation offer - understanding the logic behind the calculations

Big_Den_2

dunstonh wrote:

Unlikely the insurer would hep you there. This sort of thing comes under the realms of financial advice and most insurance companies do not stick financial advisers in claims departments. I wouldnt trust an insurance company rep on their own product either. They would have been fed the company line and believe everything is fine..

Sorry, my choice of terminology may have been confusing. I was referring to the "When telephoning ask for Mr Blah de Blah" on the compensation offer letter not an adviser persay.

dunstonh wrote:

The only way to get a proper assesment is to do it yourself (if you know where to get the information and what questions to ask) or get an IFA to do it. If you post some information on the company here we can give you some "opinion"..

Any help appreciated, as I wouldn't have a clue where to start. Some details on the policy:

Royal & Sun Alliance (now Pheonix)
Homeplan (Standard)
25 year term with a Target of £60,391 Started 1st August 1997
Premium £121.32 pm
On last projection/shortfall warning letter the following statement was included:

"The rate we have used are lower than those set by the FSA because the fund is invested predominately in lower risk fixed interest securities which have lower growth potential than the FSA assumes whe nsetting it's rates"

Den

dunstonh

Sorry, my choice of terminology may have been confusing. I was referring to the "When telephoning ask for Mr Blah de Blah" on the compensation offer letter not an adviser persay.

They wont give you any information or opinon on the policy. Indeed, the complaints dept staff probably know very little about how the policy works and what "potential" it has.

Royal & Sun Alliance (now Pheonix)

First response to that is yuk! Although second response is that they have been picking up in the last 6 months and some believe that long term, Pheonix could end up being the best thing that happened to R&SA.

Is it unit linked or with profits? If with profits, is it unitised with profits or is there guaranteed sum assured (typically around 1/3rd of the life cover amount)? This is quite important as the unitised with profits fund would have higher growth potential than the conventional with profits fund. I'm going to assume with profits as most R&SA ones were.

The reason your redress figure is that low is more likely linked to it only being 9 years in and much of R&SA's problems are in the last 5 years and not the earlier years. It would have expected it to start well and drop off later. So, ongoing, I would expect the gap between this endowment to increase, not improve (a reverse of a typical unit linked endowment for example).

Assuming with profits, I would place this as a weaker endowment now offering limited potential for the future and whilst it may just come right by the end of 25 years, it will be a stretch and not a risk I would want to take. Plus it would be a waste of money as that premium would be better utilised in repaying the mortgage or going into an ISA.