Endowment advice please - continue or cash in

prodda

I took out a 25 year endowment in 1997 with a target amount of £25k (for my mortgage). My current premium is £60.47 and current value is £12,351. I've received the usual 'shortfall' letter from Aviva stating 4% = £15,600, 6% = £18,500 and 8% = £21,900 - the MEP is £3,100.

Over the past few years I have worked in a reasonably well paid job that has allowed me to pay my £25k mortgage off and have a sum of approx £60k in ISA's and have also just retired (early) with a very good pension.

My dilemma is this - should I continue to pay the premiums for the next 11 years or would it be more advantageous to cash the endowment in now?

hcb42

If you look at how many payments you need to make, this is about £8K plus current value suggests that breakeven not allowing for time value of cash means you need £20.3K payout..which doesnt look like you will achieve it.

Personally I would cancel it and take the money now...but it's only my view, and in no way a professional opinion

holly_hobby

Don't forget (assuming a With Profit LCE) if you do cash in early, you will lose the POSSABILITY of a terminal bonus being added at maturity - which has in the past been a significant amount with some providers (but wholly depends on the pot available for TBs at the time of maturity - and is not gte'd).

Also, your endowment premium is partly funding the life assurance element of the contract - if you still need life cover of a similar amout of the GSA - the cost of purchasing the same amount could be higher than than being deducted from your endow premium - as you are some yrs older than when your endow originally commenced - so this with the POSSIBLE TB could be a reason to carefully think or seek advice.

If life cover isn't a issue & you really want out ... have you considered selling your endowment ? This may be another option - values depend on when the policy was taken out, type of policy, who the provider is, the time to maturity and the projections from your provider. Have a google to see which FS companies are still operating such a scheme.

Just other aspects that you may want to consider before you take the money and run .... !!!!

Good luck

Holly

McKneff

Yes, dont forget to factor in the fact that you have life cover whilst you are paying your endowment and there would possibly be a termianl bonus too.