Maturing endowment - no terminal bonus! Is this normal?

dunstonh

Well, you like millions of others (and myself) were sold endowments to pay our mortgages, with the carrot that if they were managed well you would end up with a bonus.

And the vast majority over the years achieved that. That was part of the problem. Complacency.

The fact is, what was 'promised' has not materialized, there is no final bonus and yes it is now normal not to get one.

Actually that is not correct. Most plans are paying final bonuses. Indeed, most providers have reduced their annual bonus and moved the returns to their final bonus which gives them a lower liability.

jamesmorgan

ib111 wrote: »

If anyone gets more than they originally expected, from when they started their endowment all those years ago, please let us all know who the life company is. I don’t expect many replies, but let’s be fair and see if there are a few companies who have done well for us customers and payers of their wages.

My 25 year policy with Guardian Royal Exchange (now part of AEGON) matured this year with a terminal bonus of 139%. Once the life insurance costs are removed the annual growth of my premiums works out as about 7.1%. This produced a 44% excess above that required.

My Standard Life policy is due to mature next year. Current bonus rates are around 13% (but have risen in recent years from a low of 5% in 2010). Annual growth rate for that policy is only 5.0% (once free shares and their Mortgage Endowment Promise are accounted for).

The only true way to measure endowment performance is to strip out the costs of life insurance and work out annual returns based on total premiums.

Buying 2nd hand policies is a risky business and only really suited for experienced investors. Often with 2nd hand policies you lose some of the benefits issued to the original holder. For example, with Standard Life you lose their Mortgage Endowment Promise (worth about £2500 on my policy).

McKneff

As has been said before -

Endowment policies have life cover in them so that has to be paid for.

All I can say is thank the Lord that your spouses or children didnt have to claim on them.

Thats it.