Plsw help us understand endowment value

panismus

In 1994 I took a with-profits endowment policy for £160,000 to repay my morgage in 24 years time, i.e. in 2018 when I will be 65 years old. Premium was £280 per month.

In 2002, the endowment company wrote to us about a shortfall in the projected end-value of the endowment and suggested we paid an additional premium bringing the total monthly premium to £410 to make the targeted value of £160K in 2018 based on the government's growth estimates (6% pa if I remember well).

We agreed tp pay the increased premium. In the meantime we converted the interest-only mortgage to a repayment one and, thanks to a windfall, we now owe the building society less than £60,000 instead ofd the original £160,000. We feel there is no reason to have the endowment and wish to sell it 12 1/2 years after starting it. The guaranteed amount in the last endowment statement received was £110,000.

Please can somebidy help me underdtand what amount to expect to receive for the above endowment before I contact companies and have to give them personal details for quotations. We have not approached the endowment company for a surrenmdervalue nor anybody else yet. I wiould be very grateful if someone could help me understand roughly how the surrender and sale values can be estimated. I understand that a the end the market will decide how much to pay for the policy but I need a rough methodology for my own financial calculations.

Many thanks.

dunstonh

There is no explicit way to tell what you will be offered as the offer will reflect what someone is willing to pay for it and what they perceive to be the future pontential growth of that fund. Plus the size of the surrender penalty comes into play as well.

Surrender values are explicitly charged and easy to verify once you know what the surrender penalties are. It varies with different contracts though. Some providers do not levy a surrender penalty after a certain point which can mean making it paid up (or continuing with it) until then is the best option.

panismus

Dunstonh,
Thanks for your reply. I was not after a precise amount to be offered, rather than something like circa 1/2 (or 1/3 or other) of the target value past the mid point (the 13th year in our case) of the endowment term, based on someone's experience with an equivalent case. Similarly, for surrendering the endowment, what percentage of the target value should we aim to get, possibly minus what amount or percentage of penalties.

Kind regards,
Panismus

EdInvestor

Post some info about it for a view

Company it's with
Guaranteed sum assured
Declared bonuses
Surrender value
Monthly premium
Matyurity date
Maturity projections

Your current mortgage rate