Flexidowment

Willow147

Hi everyone,

I've been reading this board for a while now and thought it time to ask some advice.

Back in 1990 I took out a Scottish Ammicable Flexidowment Series 2 policy paying £50 a month. I don't think I've recieved my annual statement for this year yet (which I need to chase) but last years statement said that the policy was currently worth about £18500 (sorry I don't have the exact figures to hand as they are at home and I'm not).

This policy is not to cover for any mortgage, although if my other 2 endowments continue to 'drop' in value it may have to be used (it was just planned for a nest egg).

Is it worth me cancelling this flexidowment and investing the money elsewhere or should I continue paying for the next 9 years?

Any advice would be appreciated.

dunstonh

The answer based on what you have said so far is maybe, maybe not.

A cost comparison between the existing plan and modern alternatives would need to be done going forward from this point. That is very easy to find out. Your personal circumstances and fund availabilty within that plan would also need to be taken into consideration.

Once the facts are known, then making a decision is usually very simple. Without the facts, we can't tell and it isnt safe to assume.

EdInvestor

Post some info about the endowment for a closer look:

guaranteed sum assured
declared bonuses
surrender value
monthly premium
maturity date

Willow147

Will do when I get home this evening.

Willow147

OK, here are some figures based upon my 2004 statement.

Date of Maturity : 12/04/2015
Monthly premium : £50
Rates of 2004 Bonues declared : 0.70%/1.70%
Amount of Benefit : £13,125.00
Existing Declared Bonus : £5,279.55
New Declared Bonus : £181.50
Total bonuses & benefits as at 31/12/2004 : £18,586.05

Surrender value - unknown

To be honest I know very little (if anything) about the financial markets and bought this on advice of an advisor 16 years ago.

EdInvestor

Surrender value - unknown

Ring them up and ask.This figure is fundamental to the calculation.Ask for some updated maturity projections while you're on the phone as well.

dunstonh

Also ask if there is any terminal bonus to date and if that is included in the values or not and if it is used in the projections.

Willow147

Willow147 wrote:

OK, here are some figures based upon my 2004 statement.

Date of Maturity : 12/04/2015
Monthly premium : £50
Rates of 2004 Bonues declared : 0.70%/1.70%
Amount of Benefit : £13,125.00
Existing Declared Bonus : £5,279.55
New Declared Bonus : £181.50
Total bonuses & benefits as at 31/12/2004 : £18,586.05

Surrender value - unknown

To be honest I know very little (if anything) about the financial markets and bought this on advice of an advisor 16 years ago.

Surrender value is £18,322

Updated maturity projections
4% : £31,400
6% : £36,500
8% : £42,500

A leter is being sent to me explaing the calculation of the terminal bonus to date (which is already included in the above figures).

EdInvestor

Willow147 wrote:

Updated maturity projections
4% : £31,400
6% : £36,500
8% : £42,500

Hmm.If you surrendered the policy now and put it on deposit @4% also paying in the premiums until maturity, you would get 32,564, compared with their estimate of 31,400 at 4%.

If your mortgage rate was 6% and you used the lump sum to reduce the capital owed and increased the monthly mortgage payment by the amount of the endowment premium to maturity, your effective return would be 38,072, compared with their estimate at 6% of 36,500.

Both the savings and mortgage returns are guaranteed, whereas their return is based on a risk investment in equities. So although this is one of the best With profits funds around, you are still getting no premium over a building society for taking a risk.

Up to you, but if you want a risk based investment, there are much better choices around these days than this.