Cash in endownment policy or not?

Kim_Donaldson

Hi All,

Not sure if I'm using the site correctly, but here goes. I am considering cashing in my endowment policy which I have had for 11years with standard life. My mortgage is completely separate now. I plan to pay off credit card debt, spen a little and place the rest in a savings account. Does this sound like a reasonable choice or mad?

Help!!!

Thanks, Kim

ReportInvestor

Hi Kim & welcome to the site .

Your endowment is an investment [if only people had been told that at the time ], so of course it's appropriate here.

In an ideal world it might have gone into the mortgages / endowment forum (look around there to gain some insights - there are plenty of Standard Life threads ) but EdInvestor who deals with endowment queries on that forum also looks in here and will no doubt comment as appropriate.

Write to them to get the current surrender value. At the same time ask if there are any guarantees attached to your policy (these can be valuable).

In addition we will need the following information (assuming this is a with profits endowment).

Sum assured
Bonuses to date
Monthly premiums
Start date
Length of policy

You should also make enquiries about selling your policy on the TEP (Traded endowment policy) market (assuming it is a with profits endowment) as you might get more for it than Standard offers.

P.S. You know your endowment is with profits if you received free shares in the recent demutualisation.

Kim_Donaldson wrote:

My mortgage is completely separate now

If this means that you have switched to a repayment mortgage, then it will probably make sense to use the endowment money to pay down existing debt like credit cards.

But let's do the sums first.

Kim_Donaldson

Hi,

Thanks for the quick reply.

My ploicy is with profits, was taken out 27 Oct 1995 over 25 years, due to mature 27 Oct 2020, I pay £65.04 per month and the sum assured is £36504. Not sure about bonuses.

As recommend I will contact Standard Life and find out the surrender value and ask about any guarantees. Then will find out about TEP!

Thanks again

Kim

ReportInvestor

The reversionary bonus figure (that's the bonuses that accumulate every year and, once added, are guaranteed ) will be on your annual statement.

Post back here when you've got that surrender value & we'll see what we can do for you.

How many shares did you get? If you still hold them, we have a discussion / information section

on this MSE thread

Kim_Donaldson

Hi, and thanks again.

The surrender value is £9688.77 - at closing on 10/10/2006
It is a unit linked ploicy (seemily not all buyers are interested in buying them)
Also has 6 segments - can sell individual segments (not sure I'm interested in that)

Cheers, Kim

ReportInvestor

Yep u can't sell it to a third party.

I should also have asked you to ask them for a projected maturity value if the underlying fund grows - from today - @ 6% or whatever % Standard Life is using as an average.

Rate of return (not factoring in life insurance) to date - exactly 2% pa based on your surrender value & 65.04 monthly contributions over 11 years.

Kim_Donaldson

OK,

Think I am getting the hang of this,

Growth at 7.2% - £36.504
" " 3.75% - £25,100
" " 5.5% - £31,200

At high rate of 7.25% - 38,600

Kim

dunstonh

unit linked plans are better generally and some of the standard life unit linked funds are very good. With the bulk of the charges paid, the ongoing charges may be quite low now and it could be worth keeping.

I say may because with some plans they would still be expensive whilst others would offer good value. Without knowing the charges details, no-one here can tell for sure. You would also need access to those funds. So a few questions need to be asked.

At high rate of 7.25% - 38,600

Certainly within the potential of a number of the SL unit linked funds.

Chrismaths

I think the most important thing here is what are you paying on your credit card debt? If it's not stoozing money, it should be paid off, pronto. However good the endowment is, it is not going to beat paying off debt @ 20% interest.

ReportInvestor

Hi Kim - Are those figures given out by Standard this month?

dh is correct to suggest a switching option could be considered. Do individuals have access to all the funds open for an endowment or is IFA help needed to access some of them?

cm is even more correct about the cc debt v investment issue.

Kim_Donaldson

Figures given today by SL