cash in or keep?

paddedjohn

Hi can someone help me with the maths on this one please.
My sister has an endowment which costs £89 per month and has aprox 12 yrs left to run, there is no property to worry about as it has been sold, she has been told that the surrender value is approx £13000 and may be worth about £33000 when finished (it was originally for £57000) The question we're asking is, is it worth cashing in the policy and paying off a bank loan which costs £235 per month and credit cards which cost £75 per month interest only, after paying off these debts she will have about £2000 left but will save about £400 per month in payments including the endowment.
Sorry if its all long winded and any advice would be helpful.

paddedjohn

help anyone?

Rikki

Me personally...

I can't see the point in paying out nearly £100 a month for a unpredictable savings plan. I'd cash it in and clear my debt. Then I would continue to save the £100 in a better savings account.

Karti

paddedjohn,

Just going through the same predicament at the moment.

In my view, if we go back to square one....so if she cashes in:

1. She stops the endowment policy and saves £89 per month
2. She pays off her credit cards and saves £75 per month (interest only)
3. She pays off her loan at £235 per month.

Now assuming that the money that she is paying out can go directly to savings and not pass go if she puts all this money that she has saved - 89/75/235 it gives a grand total of £399:
Monthly Savings - £399
Annual Savings - £4788

If she continued saving this money after clearing everything and saved diligently for the remaining 12 years, it would be £4788 x 12 = £57,456.

So (and its all statistics) by clearing her debt and continuing to save should would achieve the required amount in the same time.

Again just my opinion but I am looking to do the same thing. However as it was mentioned to me she should be aware that removing the policy would also remove any life cover that came with it.

New to posting here so I hope that helped

Regards

K

dimbo61

All i can add is the figures above dont allow for interest !!!
At this moment she is paying interest on the loan and lots of interest on the credit cards but if she cashes in the endowment and clears her debts then she should ?? be able to save £400 a month in a cash ISA,s earning 3%+ over the next couple of years.
She could also take out cheap life assurance for life cover if needed