Aviva endowment - continue or leave?

pauljoecoe

I have a couple of 25 endowments with Prudential maturing later this year and next year. They are performing very poorly but there is not long left and i am not relying on them to pay the motgage anymore so i amd just going with them.

However i have another Endowment with Aviva (originally with GA i think?) and this is costing £65 per month and has another 8 years to run.

As the Pru one is only returning 2% annually at the moment it makes me wonder whether i am being sensible in continuing to pay into the Aviva one? Again I don't need the money for the mortgage so am looking at it as a savings plan. However is this the best thing to do for the next 8 years. Will the final bonus make it worth while sticking in there?

dunstonh

As the Pru one is only returning 2% annually at the moment it makes me wonder whether i am being sensible in continuing to pay into the Aviva one?

Are you sure its only 2%? That doesnt reflect bonuses over the last 12 months on the ones I have seen.

With the Aviva plan is there any mortgage endowment promise (MEP)?

We will need more details to give any other opinion though. It will be impossible to say without figures.

Thrugelmir

Making the policy paid up is another option.

pauljoecoe

dunstonh wrote: »

Are you sure its only 2%? That doesnt reflect bonuses over the last 12 months on the ones I have seen.

With the Aviva plan is there any mortgage endowment promise (MEP)?

We will need more details to give any other opinion though. It will be impossible to say without figures.

1. The prudential with profits policy I pay £20.09 per month. Present bonus's are £4947 and 2009 bonus is £116. It has 6 months out of 25 years to run. It was meant to cover a 15150 mortgage. thats less than 2% i reckon.

2.The Aviva policy i am concerned about was meant to cover a 46000 mortgage and was taken out over 25 years and has 8 years to run.

It is costing £65 per month. Latest info (march 2009) says it is returning 3.6% of the sum assured and 5.1% on previous declared bonuses. Sum assured is £15594 and previous bonuses are £5908. That's £23365 with 8 years to run. Surrender value is £14064.

If i make the policy paid up do I still receive a final bonus?

There is a MEP (providing the investment return on their reserves is sufficient).Projected shortfall at £4% growth is £18700. The maximum MEP is £8400 anyway.

dunstonh

There is a MEP (providing the investment return on their reserves is sufficient).Projected shortfall at £4% growth is £18700. The maximum MEP is £8400 anyway.

So, you add the £8400 to the projections (to a maximum of the target amount).

If i make the policy paid up do I still receive a final bonus?

you do, although I believe you lose the MEP which is a significant value. You certainly lose it on surrender

Thrugelmir

pauljoecoe wrote: »

If i make the policy paid up do I still receive a final bonus?

The policy is frozen as its value today. The sum assured will then continue to accrue annual bonus and receive a terminal bonus on maturity.

Should result in a better return than surrendering the policy now.

Then the premiums for the policy can be redirected into paying the mortgage. May not solve your problem entirely but will at least put you on the right track.