Endowment Surrendering - Some Questions

too_much_debt

Hi

I have an Endowment with Prudential, took it out in May 1996, paying £57.04 a month. It is currently linked to our mortgage, fixed rate ends in June and we are changing to full Repayment so my Endowment won't be linked.

I rang Prudential up today to find out the surrrender value and today it stands at £10,195.30, this is a grand or two more than I was expecting.

So my questions are:

1. Should I cash it in now.

2. Should I wait until end of April when I will have paid for 14 years exactly and I'm assuming that is when bonuses are added.

3. Should I wait until it is no longer linked to the mortgage.

4. I have £27k worth of debt on credit cards, one card alone (MBNA) is £116 a month interest, I have 8 credit cards.

Not sure if it's best to cash it in now and pay it off what I owe, or wait. If I wait I'm accruing loads of interest which is making my debt go up quite fast. I am a SAHM and only have CTC, CB and my Ebay money to live on. I would also be able to use the £57.04 a month to pay off the debt.

It is due to pay out £31,350 in 11 years time but is not on track to pay that much so seems silly to pay another 11 years when my debts will be well over that amount by the time it matures.

Hope this makes sense. Any advice greatly appreciated.

TMD

dunstonh

1. Should I cash it in now.

you wont know what is best until maturity. However, it will also depend on what you are doing with the surrender value.

2. Should I wait until end of April when I will have paid for 14 years exactly and I'm assuming that is when bonuses are added.

That isnt when bonuses are added. However, surrender penalties often change on policy anniversaries.

3. Should I wait until it is no longer linked to the mortgage.

You should wait until you have replacement life assurance.

4. I have £27k worth of debt on credit cards, one card alone (MBNA) is £116 a month interest, I have 8 credit cards.

That is expensive debt and clearing that should be a priority.

It is due to pay out £31,350 in 11 years time but is not on track to pay that much so seems silly to pay another 11 years when my debts will be well over that amount by the time it matures.

Projections are not reliable. Pru have a very high success rate on hitting target and many that have paid a surplus have had shortfall projections after a major crash.

Your debt issue and ability to afford moving to repayment are the main drivers here though.

too_much_debt

Thanks for replying.

I do have separate life insurance cover with Norwich Union up to £250k.

My mum and dad had about £40 left over once their Prudential Endowment finished and it paid off their mortgage.

My debts are a big problem and the interest is about £400 a month, that is why I am leaning more towards cashing it in but am not sure whether to do it this month. I just paid this months premium today.

The £10k would be very handy right now.

dimbo61

You have £27K in credit card debt costing you anything from 8.9% ( if your lucky ) to 29.9% so as you have other life insurance, cash in the policy ( or see if you can sell/ auction it !) and clear £10K off your debts starting with the most expensive CC debts first.
Change to a repayment mortgage and make 2010 the year you become debt free ( at least CC debt free) GOOD LUCK

too_much_debt

Thanks Dimbo61

I will definitely surrender it in the next few months, the thought of all that money, lovely.

too_much_debt

UPDATE

I sold my Endowment through AAP, was paid £10,747 (Prudential figure was £10,195.30). Paid cheque into bank on Monday and was told it should clear on Friday.

Highly recommend the company, only took 2 weeks from start to finish (mind you I did send the forms and all the information and my passport off to them as soon as they requested it).

Thanks to those who replied to my original message for the useful comments.