NU WP Endowment - comp offer - what to do now?

MoreDon

Having made a complaint to the Ombudsman about a with profits endowment sold to me in 1989 by the Commercial Union (now Norwich Union), and having had the complaint upheld by the Ombudsman, I have now received an offer from NU.

Their offer is comprised as follows:

Ø An ex-gratia amount of £3,766.87

Ø An offer to pay the surrender value of the endowment if I wish to cancel the policy, which amounts to £9,206.06.

Ø If I decide to cancel the policy they will quote for a life cover policy for the outstanding mortgage loan over the remaining term. The premium for such a policy would not exceed what a similar policy would have cost in the year the mortgage commenced for the original mortgage loan and term.

I will almost certainly accept the offer of the ex-gratia amount.

However, I am at the moment still undecided about the other two parts of the offer, and would welcome advice from others.

The terms of the original policy are:

Commencement date: Feb 1989
Maturity Date: Feb 2014
Amount of mortgage £35,475
Basic sum assured (the amount on which they calculate the bonuses): £10,075

The bonuses accrued to date are £6,865. I have always understood that the amount I am guaranteed to receive on maturity would be the basic sum assured plus any bonuses accrued – so currently this figure is £16,940.

I have no desire to throw good money after bad, so my question is should I accept their surrender offer (does their offer represent good value given the amount accrued to date) or should I go instead for a paid up policy? Is the paid-up amount likely to be more than the surrender value.

Alternatively, should I seek to sell the policy in the open market?

Finally, is their offer to quote for life assurance (at a premium not exceeding what a similar policy would have cost in the year the mortgage commenced for the original mortgage loan and term) a good offer? I understand by this that they will quote the rate pertaining in 1989, but haven’t life assurance rates fallen substantially over that period?

Sorry for the length of this but now that I have achieved something like what I set out to achieve I want to make sure that I don’t sell myself short at the final hurdles.

Incidentally, I have read that some people have been offered a choice of which method of calculating the compensation by the company, but I was not offered such a choice. Should I now ask?

Very grateful for advice.

Ludders_2

To be able to comment I need to ask a couple of questions. You wrote: "The bonuses accrued to date are £6,865. I have always understood that the amount I am guaranteed to receive on maturity would be the basic sum assured plus any bonuses accrued – so currently this figure is £16,940." Can you explain what you complained about?

As you know the policy proceeds are not guaranteed to repay your mortgage, are you still prepared to take the risk of a possible shortfall?

Ludders.