Endowment Shortfall

thebutlerforall

I have an endowment policy which I have received warning letters about every year. Then every year the normal real life issues such as work, death, divorce, emergencies, cancers etc take up so much time that I don't ever get to think about the endowment and what to do next. I just keep paying and was blissfully unware most of the time of how much money I was wasting.
Looking at the letters yesterday just saddened me when I realised how much money over the years I have wasted on this endowment and not acting sooner has wasted even more. Part of the problem is not undertaanding the annual statements etc. Last year I paid £600 inot it and it lost value of £1100 compared to the previuos annaule statement - if I am reading them right.
Still, I'm not looking for sympathy just explaining why things are as they are.
My questions really are - is it too late to complain about the shortfall - please don't laugh! (but have a laugh if it brightens your day)
and secondly where is the right place to post and where is the right place to read all the past information so that you all don't have to repeat everything. I find there are so many forums and subjects it can be a bit overwhelming.
Thanks everyone.

dunstonh

Last year I paid £600 inot it and it lost value of £1100 compared to the previuos annaule statement - if I am reading them right.

That would be the effects of the global recession. This year you would expect it to go the other way.

My questions really are - is it too late to complain about the shortfall - please don't laugh! (but have a laugh if it brightens your day)

You have never been able to complain about the shortfall. Only about the sale of the policies in the first place (if the sale broke the rules). However, the vast majority of those are now timebarred as you get three years from first being notified of a high risk of shortfall. Most when into a shortfall position after the tech stocks crash in 2000-2002. Most providers started issuing compliant warnings around 2003/4 and the majority of time bars kicked in during 2007/8. Some are still not time barred but most are. The endowment issue is largely over with now. Yours may or may not be timebarred but its not possible for us to say.

secondly where is the right place to post and where is the right place to read all the past information so that you all don't have to repeat everything. I find there are so many forums and subjects it can be a bit overwhelming.

Now you have already posted, its a bit late However, you have posted in the right place. The clue being in the forum title which is Mortgage & endowments.

thebutlerforall

Thanks for the information. Seems my next step then is to decide what to do next.
My policy started in May 1994, ends in May 2027, sum insured is £77500, Surrender value is £8500 after 16 years of payments, premium is £46.
Shortfall letter says it may pay out £26000 if it grows at the lowest rate.
If I surrender the policy it hasn't made one single penny of profit over 17 years - I find that quite remarkable.
I have 17 years to get the difference together!
Do I just get an IFA to advise me.
Thanks alot.

dunstonh

I have 17 years to get the difference together!

Thats not a problem really. Interest rates are so low now that you can make hay on that and overpay.

If I surrender the policy it hasn't made one single penny of profit over 17 years - I find that quite remarkable.

Not really. A 40% stockmarket drop in the first few years makes no real difference. e.g. £46x 24 = £1104. Suffer a 40% drop and you lose £441. However, a 40% drop after 16 years would see £10,000 drop to £6,000. A much bigger hit. The stockmarket dropped by 43% during the recession. It has recovered a lot over the last year but is still below the high point by some way.

Are those values your current ones or a previous date?
Who is the provider?

Dick_here

thebutlerforall wrote: »

If I surrender the policy it hasn't made one single penny of profit over 17 years - I find that quite remarkable.

And if you'd died just after taking it out, your next of kin would have made an immediate huge profit out of everyone else's payments...

thebutlerforall

!!!!!!_here wrote: »

And if you'd died just after taking it out, your next of kin would have made an immediate huge profit out of everyone else's payments...

I did think today that one thing the policy does give me is life cover of £77500 for the next 17 years and last 16 years so thats a good thing. I'm not sure I could get the same amount of life cover at the same rate today as I am now 16 years older than when I first took the policy out.

thebutlerforall

dunstonh wrote: »

Thats not a problem really. Interest rates are so low now that you can make hay on that and overpay.



Are those values your current ones or a previous date?
Who is the provider?

The provider was Abbey National Life which was sold to Pheonix and which is now sold to Royal London.
In May 2010 the plan value was £9581.14.
In May 2010 the projection at 4% is £28300 projected final amount with the projected shortfall being £49200.
At 5.7% the projection is £36500 with a shortfall projection of £36500.
At 7.5% the amount would be £46900 with a shortfall of £30600.
My premium is £49.85.
Thanks.

magpiecottage

thebutlerforall wrote: »

I'm not sure I could get the same amount of life cover at the same rate today as I am now 16 years older than when I first took the policy out.

That is a common misconception.

In fact, when you first took out the policy you had 33 years in which to "enjoy" the death benefit. Now you only have 17 years. Admittedly you were always more likely to die in those 17 years than the first 16 but there is now no chance that you will die in the 16 years before today.