Cash in endownment policy or not?

Kim_Donaldson

Guess I should also say that I have £4000 in credit card debt which I have being trying to clear for the past couple of years but seem to run in circles, I do tranfer to O% cards, and try not to spend unless in emergencies, however I have very little each month to live on...so trying to balnce life now or save for the future. Am a nurse so do have pension with employer.

Thanks for all your comments,

KIm

dunstonh

You can ask SL for a list of available funds. No IFA is required. The only information SL tend to hold back is the final bonus and that doesnt apply here.

Im not saying that fund switching is the right thing to do but it is an available option that needs to be considered. I came across a unit linked endowment some time back (not SL) that had a 105% allocation after the 10th anniversary on purchasing of units. So, whilst the initial charges in the first couple of years were high, they were done and dusted and we couldnt do anything about that. However, looking forward, the good allocation rate and some pretty good funds made keeping it, along with the life cover and critical illness cover, the best option.

So, its a case of looking and costing the various options and taking the best action to suit you.

ReportInvestor

OK. If Standard's funds grow @ 5.5% you are due to get £31,200.

To match this you need to grow both the surrender value and your £65.04 contributions at 3.9% over the next 14 years to October 2020.

Obviously by cancelling the policy, you will lose life insurance and you need to factor that into your choice and your sums.

3.9% pa is probably achievable using mini-cash ISAs (although there some interest rate risk and some potential legislative risk if they were abolished) or a whole range of other investments.

There is also the chance of your Standard policy performing better than 5.5% (even if you don't switch the funds). Against that the cost of your debt is a certainty you can bank on.

Hope this helps.

Kim_Donaldson

Thank you for your time and help, I need to now sit and think about my options.

Kim:j

EdInvestor

Kim_Donaldson wrote:

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?
Thanks, Kim

Undoubtedly this is the way to go. Paying off the CC debt gives a return which no way the funds can match, and 4% in a savings account will likely better SL's returns anyway, on a guaranteed, not risk basis - as well as providing a buffer against getting into debt again.

Replace the life cover before surrendering if you need it, just in case there's a snag.