endowment - should I continue paying or cash in now?

hannaht

I'm dithering again about my endowment policy with Countrywide assured. We've held the policy for 12 years and total paid in is now £20987.93. I rang today to ask what the surrender value would be and its £19,532.49, so if we were to cash in today we would lose £1455.

We're not exactly flush but don't desperately need the money adn we changed to a repayment mortgage years ago, it just seems that we may be throwing good money after bad and might be better off if we cash in the policy and put it towards paying off the mortgage (outstanding balance £25k

My instinct is to cash it in - does anyone have any words of wisdom for me?

Many thanks to all you clever people who understand these things much better than I do!

terryw

The general advice with life assurance is to let the policy run the whole of the period. Future bonuses are likely starting to be worthwhile now. And there is likely to be a terminal bonus.
At least, why not leave it a little while longer? Fairly soon, the increasing value with bonuses is likely to be enough to pay-off the mortgage which is presumably decreasing.

EdInvestor

terryw wrote: »

The general advice with life assurance is to let the policy run the whole of the period. Future bonuses are likely starting to be worthwhile now. And there is likely to be a terminal bonus.

Only if it's a WP policy, this one may be unit linked.

What has been the trend of policy value growth over the last 6 months?If it benefiting/parallelling market recovery?If not you might be best to dump it and pay off the mortgage,What interest rate are you paying on the mortgage?

hannaht

Thanks for the replies. I don't know what the policy has done in the last 6 months it's about a year since I checked the value. Do you know how I would find this out?

Our mortgage is with Nationwide and we're on the standard rate I think it's 3.9%. Our tracker ended recently and because the outstanding balance is quite low, it wasn't worth paying the arrangement fee for a new tracker so we just went onto the standard rate. One of my other jobs now kids are back in school is to check whether we could get a better deal elsewhere.

Thanks for taking the time to reply.

Gorgeous_George

Nationwide's BMR (base mortgage rate) is 2.5%.

I'm not a fan of endowment policies.

GG

EdInvestor

hannaht wrote: »

Thanks for the replies. I don't know what the policy has done in the last 6 months it's about a year since I checked the value. Do you know how I would find this out?

Call them up and ask the current value and transfer value.Also ask for maturity date and maturity forecasts and post your monthly premium..

VIGILANT22

Rememeber you have life insurance on your endowments (amount ??)....has your health changed since taking them out or do you have other life cover?

hannaht

Hi

The life assurance on the policy is £20000. We have alternative life cover so that isn't really an issue in our decision.

The maturity date is Sept 2022 and the maturity value she just quoted me was £65,400 that was at 6% growth. By that time we will have paid in £42k.

We pay in £140 per month.

hannaht

sorry meant to add, it is a unit linked policy

EdInvestor

And can you please confirm the mortgage rate you are paying?

G_M

You could also consider selling your policy. There are companies which buy these, usually for more than the surrender value, and make their money by holding them till they mature. Be careful to ensure you fully understand any quotes/contracts you receive, but this is an accepted way to increase their value to you.

Read the FSA explanation here.

Here is an example company, but just google 'sell endowment' for many more.