Standard Life and Royal and Sun Endowments

dantebel

Hello, this is my first post, although I visit the site regularly.

I have just moved my mortgage to repayment (actually before I got the booklet that Martin wrote) and now have two endowments £15k each with Standard Life and Royal and Sun Alliance.

Standard Life is 14 years into a 25 year period and is an "L with Profits" policy. I presume that this means that it is index linked and has no sell on value. Is this a correct assumption? It has a redemption value of £3369 as of yesterday's date.

I am also unsure whether it would entitle me to any pay out on demutualisation or when that is planned.

I also have a Royal and Sun Alliance Policy which is nearly 7 years into a 19 year period. I have had compensation for misselling for around £1000. The redemption value is £2452 which is less that I have paid in.

I have read the recent threads regarding cashing in the policies and paying into the mortgage, but wonder if anyone has any suggestions as to whether I would be better to hold onto these policies or redeem them at present. I understand that I would need to take further life cover if I sell them.

I hope the questions make sense and that there might be some interesting feedback. Thank you.

dunstonh

Standard Life is 14 years into a 25 year period and is an "L with Profits" policy. I presume that this means that it is index linked and has no sell on value. Is this a correct assumption? It has a redemption value of £3369 as of yesterday's date.

No. This means that it is invested in the "Life With Profits Fund".

With profit funds can be sold on as a traded endowment policy.

However, before you consider that, you should check posts in this section over the last few months about Standard Life. They are not that bad and their projections are not accurate. Plus there is the demutualisation benefit that will be due in a year or two.

An assessment of the policy and proper calculations need to be made to see if it is worth maintaining this plan.

I also have a Royal and Sun Alliance Policy which is nearly 7 years into a 19 year period. I have had compensation for misselling for around £1000. The redemption value is £2452 which is less that I have paid in.

R&SA with profits is dire. You may not find that the third party endowment companies are interested in R&SA plans. Unit linked is a different issue but you dont say which you have. Again, you need to look at the costs of surrender against the option of maintaining it.

Without knowing the full details, no-one can advise you on what is best.

dantebel

Thank you dunston. I have looked at the Policy Schedule for the R&SA endowment and there is no mention of it being unit linked so I guess that it isn't.

Do you have any info about the demutualisation benefit likely?

dunstonh

The members should get information this year with a vote taking place next year.

There are suggestions that a vote now would result in a no to demutualisation. That actually wouldnt do standard life a lot of good in the long run.

If the members can have their minds changed, then any demutualisation benefit is likely to be late 2006, early 2007. It is not yet known how any benefit would be paid. It could be a bonus added into the plan, issued as shares or a cash windfall.

Policyholders are going to be told late 2005 what plans qualify and what do not.

dantebel

Thank you.

I have found more info in other threads too. Very useful.

caro69

There seems to be several people who continually post to this board saying that Standard Life Endowment projections are very flawed. I believe that all Endowment projections are flawed and not really worth the paper they are written on, but to suggest that Standard Life policies will do very much better than their projections is extremely dangerous.

I have seen the figures for an Endowment that matured last year and the figure was very similar to the 4% projection quoted to the member 12 months before. It is therefore very possible that payouts will be considerable less for the forseeable future.

Yes, it was a 25 year with profits endowment. Just please don't be led into a false sense of security by those who somehow feel that there is more value in Standard Life endowments than they are letting on.

dunstonh

but to suggest that Standard Life policies will do very much better than their projections is extremely dangerous

I don't think anyone is suggesting that. However, when the guaranteed sum assured plus annual bonuses already added are higher than the 4% projection, then it is safe to assume that you will receive the higher figure.

Yes, it was a 25 year with profits endowment. Just please don't be led into a false sense of security by those who somehow feel that there is more value in Standard Life endowments than they are letting on.

Indeed this should always be the consideration with any provider. I'm am recommending the surrender of a Standard Life endowment in a case this week. However, i have also recommended on other times to hold on to them.

The provider itself doesnt mean you should or should not hold on to the plan. It is the policy that matters and the things linked to that. Providers will have different versions of a plan over the years and some will be better than others.

However, Standard Life are perhaps the highest profile insurer where the flaws of endowment projections show more than others.