Selling Endowment Policies

Steve1955_2

Hi, I am interested in cashing in 2 with profit endowment policies I have with standard Life. Having recently been medically retired and now struggling with bills and mortgages etc. This and my savings will allow me to pay off my mortgage.
I have received the surrender values of £29,000 the policy matures November 2012. The quote states if I hold on to it for the full term it could be worth £33,700. with outstanding payments of £2,200, I could again another £2,500. I have read that most companies offer a terminal bonus
something Standard Life have not mentioned, has anyone heard of this or had any experience which may help me with my decision. I don't want to sell if there is more to gain than Standard Life are letting on.

opinions4u

There should be a terminal bonus - but they won't know the value until maturity.

There may also be a "Mortgage Promise" amount not included in the figures that you have been given. Ring them and ask about this. You will lose it if you surrender.

Personal view? As you're so close to the end of the policy, I'd hang on to it for the next two years. But I say that without knowing the depth of your finances.

dunstonh

Standard Life mortgage endowment promise (MEP) figures tend to range from a very small amount to figures in the tens of thousands. You should not make any decision without knowing what range your MEP figures are for the policy. Especially as you have so little time left.

You are able to find out what the current terminal bonus accrued to date is. Its not information that they give out automatically sometimes but the will supply it upon request.

shadowdog

Regarding terminal/final bonuses i have just received an annual update from Aviva informing me that once again the value of my policy has gone down increasing the shortfall.I have just enquired about the terminal/final bonus for this and another policy and cannot believe how low the terminal/final bonus rates applied for these policies have dropped.From experience i would strongly advise anyone not to take out endowments.Some people on this site have mentioned that terminal/final bonuses acrue over the term of the policy,this is not the case.

dunstonh

.From experience i would strongly advise anyone not to take out endowments.

Not an issue. There are no low cost mortgage endowments on the retail market. It should be noted that the endowment itself is not the issue. At pure level, it is just a tax wrapper. A container for investments. It neither makes money or loses money. The investments within the tax wrapper do that.

Some people on this site have mentioned that terminal/final bonuses acrue over the term of the policy,this is not the case.

You are wrong. Most providers will accrue them over the term and supply that information upon request. Some are very up front with it and show it. Others only supply it on request.

shadowdog

You are wrong. Most providers will accrue them over the term and supply that information upon request. Some are very up front with it and show it. Others only supply it on request.[/QUOTE]

Correction, in my case Aviva (ex Norwich union) the final bonus varies from year to year and this year the bonus rates have dropped to there lowest level ever including regular bonuses which are added very year. I do not know what providers accrue final bonuses over the endowment term?.(once accrued are guaranteed).
To quote Aviva "There is no guarantee that these levels of final bonus will be payable in the future".

dunstonh

Correction, in my case Aviva (ex Norwich union) the final bonus varies from year to year and this year the bonus rates have dropped to there lowest level ever including regular bonuses which are added very year. I do not know what providers accrue final bonuses over the endowment term?.(once accrued are guaranteed).

Final bonuses have never been guaranteed. They can go down and up and be fully removed. However, they DO accrue as you go along. Some change daily. Some older types change one a year. You can ask the final bonus on the plan at any given time.

You mention Aviva. Aviva will tell you the final bonus accrued to date (whether it be zero or whatever) on its plan.

Accrual and guarantee are two different things.

shadowdog

dunstonh wrote: »

Final bonuses have never been guaranteed. They can go down and up and be fully removed. However, they DO accrue as you go along. Some change daily. Some older types change one a year. You can ask the final bonus on the plan at any given time.

You mention Aviva. Aviva will tell you the final bonus accrued to date (whether it be zero or whatever) on its plan.

Accrual and guarantee are two different things.

Dunstonh as you state final (terminal) bonus rates can go up and down and as i have said in the case of Aviva these final bonus rates have this last year been lowered to an all time low ( i have the last 24 years tables). In the case of Aviva the only bonus that accrues is the regular bonus which is different to that of the final bonus which is only paid as a final/terminal bonus on the end of the endowment term and therefore the bonus rate at the time will be applied.I have asked for the final bonus on my plans this week and as i keep saying the final and regular bonus rates have dropped to there lowest levels ever over the life of my policies (24 & 23 years).I dont see how a final bonus which is only paid on policy termination can accrue?

ACCRUE- if money accrues or is accrued,it generally increases over a period of time.

dunstonh

shadowdog wrote: »

Dunstonh as you state final (terminal) bonus rates can go up and down and as i have said in the case of Aviva these final bonus rates have this last year been lowered to an all time low ( i have the last 24 years tables). In the case of Aviva the only bonus that accrues is the regular bonus which is different to that of the final bonus which is only paid as a final/terminal bonus on the end of the endowment term and therefore the bonus rate at the time will be applied.I have asked for the final bonus on my plans this week and as i keep saying the final and regular bonus rates have dropped to there lowest levels ever over the life of my policies (24 & 23 years).I dont see how a final bonus which is only paid on policy termination can accrue?

ACCRUE- if money accrues or is accrued,it generally increases over a period of time.

OK, we will just have to disagree then. However, the fact is that Aviva do not wait until maturity to build up a final bonus. It is possible for them to tell you have much final bonus you have at any point in the policy (with the exception of some very old conventional with profits plans or industrial branch plans).

Thrugelmir

Steve1955 wrote: »

I don't want to sell if there is more to gain than Standard Life are letting on.

There is also the option of making the policy paid up. This means the policy will be frozen with no further premiums payable. You will then receive any final bonuses on the frozen policy value.

Ask Standard Life for a quotation.

shadowdog

dunstonh wrote: »

OK, we will just have to disagree then. However, the fact is that Aviva do not wait until maturity to build up a final bonus. It is possible for them to tell you have much final bonus you have at any point in the policy (with the exception of some very old conventional with profits plans or industrial branch plans).

Dunstonh why do you use the phrase build up which implies final bonuses gain over the policy life.To Quote Aviva
"We aim to pay a final bonus to increase the value of your plan at maturity,at the selected retirement date,if you die,or transfer/cash-in your plan.
Final bonus rates are reviewed at least twice a year,at mid and end year,however we may change at any time during the year,particular in adverse market conditions"
I am trying to point out the fact that Final bonuses do vary (increase/decrease) and are only applied as above,they do not build-up or accrue and in Avivas case have this year dropped to there lowest level (also regular bonuses) which i can only assume is because of adverse market conditions?