Endowment dilemma - keep or cash in - v. confused

debtfree_dreamer_2

Hi

Just rec'd compensation offer from endowment complaint but my dilemma now is whether to keep paying into endowment or cash in/sell on.

I have requested quote for selling on - no info yet but would like some help on what to do next.

The policy is a homemaker with-profits from Norwich Union.
start date: 24 May 1996
maturity date: 24 May 2021
premium: £113 monthly
target amount: £61,891
minimum amount: £23,210
Bonus: 3,640.82

projected:
4% 38,400 - 5% 48,500 - 8% £61,100

There is a price promise - which could top up any shortfall by a maximum 10,191, (with conditions so won't hold my breath).

the statement suggests profits of 10.4 (2003) 9.9 (2004) & 14.8 (2005) but before that it was -8.0 (2001) & -6.8 (2002). I have no idea what this endowmnet is going to do.

Is it a good policy or should i scarper? Help .... please ...

thanks

EdInvestor

Hi DD

Please post the surrender value.Ring them up and ask. Also post which fund it is in ( the NU fund, the CGNU fund, other?)

debtfree_dreamer_2

Hi EdInvestor

Surrender value: 9480.96
and its the CGNU Fund.

any advice - would find helpful - so thank you.

DDreamer

TR4

I've just taken the decision to sell my Standard Life endowment and the point that I would add is that if you decide to sell, get several quotes before commiting yourself

Standard Life have quoted me £18,550, one company has offered me £19,550, and another has offered £25,176!!

The 1st company will buy the policy themselves and I would get paid fairly quickly, and the 2nd will only pay me when it has found a buyer (i.e. thay are acting as a broker

My policy has not been used to pay off my mortgage (I switched to a repayment years ago) but I kept it going for the demutualisation payment and the additional life cover

....which reminds me, if you do sell check you still have sufficient life cover!

EdInvestor

debtfree_dreamer wrote:

target amount: £61,891
minimum amount: £23,210
Bonus: 3,640.82

projected:
4% 38,400 - 5% 48,500 - 8% £61,100

If you surrendered the policy and put the money on deposit @4% over the period also paying in the premiums to maturity, you would get 44,810, which is somewhat higher than their figure at 4% growth, demonstrating the effect of charges and the cost of life cover.

The CGNU fund is one of the better ones, which all else being equal might make 6% growth over the period, so you might get around 50-55k.

What interest rate are you paying on your mortgage? You might get a very similar return - but with no risk - by cashing it in and paying off part of the loan.

debtfree_dreamer_2

Thanks for the advice.

Life Cover not a problem - other cover already in place.


Mortgage interest rate currently 4.85% flexx rate at CBS.

moving towards idea of selling i think, so now got to try and get best price - and put it to best use.

thanks for the advice.

DFDreamer

EdInvestor

The notional return @4.85% is 48,979 and that's a guaranteed return.There's very little, if any, premium in these old endowments for taking a risk, that's the main problem with them.

The reason for this is a combination of a)high charges and b) the new rules on With profits fund investment, which require them to put a higher amount into bonds.This makes the investment safer but cuts the return.

debtfree_dreamer_2

EdInvestor -

Do you mean if I paid the 9K surrender value of my existing mortgage plus premiums - I save 48,979 off the mortgage?

DFD