10 years into endowment - advice please

lisa76

I have an endowment with Aviva taken out in April 1999. I pay £42.95 per month and the target amount is £28000. Maturity date is 29 April 2024.
Last July I had an amber alert. The current value in July 09 was £12358.80

What I'm wondering is whether to
1. cash it in and pay it off my mortgage - I am just about to sign up to a 3yr fix 3.89% (8191 repayment and 76500 int only) - and then use the monthly payments as overpayments
or
2. carry on with it
or
3. i've read something about leaving it in there as 'paid up' so essentially I stop paying into the endowment every month but I don't have the cash, but I could use the 42.95 as overpayments every month.

If anyone can offer some advice then I'd be grateful - do you need any other figures????
Thanks!

dunstonh

If anyone can offer some advice then I'd be grateful

if you want advice you will need to see an IFA. You wont get advice here. Just comment and discussion.

Last July I had an amber alert.

So, despite the major economic issues, its doing ok.

You will need to post more information about the plan for anyone to comment.

lisa76

Thanks Dunstonh, I meant discuss not advise, sorry.

I've just got off the phone to a lovely lady at Aviva who couldn't have been more helpful. As at today my surrender value is 6686.86. I do have the option to 'pay up' but not to switch funds. She also suggested I could sell my policy and I may get more money that way, so she's given me a number for Marketmakers to see if they can offer me more.

Mmmm so now I know how much I could get I need to use the overpayment calculators to see how that could reduce my mortgage.

dunstonh

Look at your 2001 or 2004 statements and see if you have a mortgage promise value. This amount is added to your maturity if you fall short of the target. If you sell/surrender or make paid up, you dont get that money. If its a small amount, it may not be an issue. However, I have seen them in the tens of thousands of pounds mark.

With yours just being amber now then yours may not be a bad one. If you have a mortgage promise value attached to it as well then it could swing it into being a keeper.

lisa76

I don't think I've got a promise value. Here are some figures from my 04 statement:
Value on death 28000
Min life ins amt 10668
Reg bonus added 31 dec 04 62.50
Reg bonus from prev years 912.60
Total reg bonus 975.10

I had red alerts on my letters dated May 06 and May 07, I had an on track letter dated April 08 and an amber letter dated July 09.

So looking at all statements etc there is nothing called a mortgage promise value, only a sum assured of 10668.00

dunstonh

Check your 2003 statement. I am sure its on the 2004 but I may be wrong. Its certainly on the 2001 statement.

It only appears on those two statements. All since dont show it. Aviva would tell you if you ask but they dont go out of their way to tell you.

lisa76

Ah I think I have something...
Subject to certain conditions you may receive up to a max of 4300 under 'Our promise to policyholders'. This amount is not guaranteed and for full details of our promise read leaflets....

Another statment says...
If investments grow at 4% each year:
Target 28000
Projected 18100
Shortfall 9900
Surplus 0
Max payment under our promise 4300
Potential shortfall under our promise 5600

Ahhh I'm starting to see what this all means now, so if I only have 18100 in my pot, potentially Aviva COULD add another 4300 to that.

How does that look then?????

dunstonh

Ahhh I'm starting to see what this all means now, so if I only have 18100 in my pot, potentially Aviva COULD add another 4300 to that.

You have got it. The "Could" is standard financial services speak. We rarely use the word "would". The main reason for "could" in this case is because if the endowment hits target you wont get it or if the endowment is short by say £500, you would only get £500.

Can you post your latest statement figures so we can look at those?

lisa76

The last letter I had from them was dated 4 July 2009:
Your low cost endowment policy was set up to repay your mortgage as follows:
Start date 29 April 99
Maturity date 29 April 2024
Premium 42.95
Current Value 12358.80
Target Amt 28000
If investments grow at 4% proj final amt 20300
6% 25300
8% 31700
Amber alert - significant risk of a shortfall