Cashing in Endowments

Oreo12_2

We are due to have quite a short fall in our endowments when our mortgage expires in 5yrs.
We are looking at changing our whole mortgage to a repayment and extending by a few years to make things easier and we will just cash in the endowments, is this the right choice??
We have been accepted in principle by the Nationwide and everything seems ok on paper

kingstreet

Is it possible you might lose a terminal bonus, or some form of guarantee payment if you surrender early?

IIRC Standard Life and NU/Aviva had some products with guarantees.

GlynD

Kingstreet is right. If it's only 5 years and you can afford to keep the premiums up it would be better to let the endowment run to ensure you get the terminal bonuses. On the other hand you may be in our situation where you have no choice but to cash it in and pay the money off the mortgage. Doing that would save you a fortune in interest.

Oreo12_2

We have just looked at the worth of the policy as it does state worth under "If cashed in now"
Policys are with Friends Provident (shocking return) and Standard Life

GlynD

Oreo12 wrote: »

We have just looked at the worth of the policy as it does state worth under "If cashed in now"
Policys are with Friends Provident (shocking return) and Standard Life

The returns could be boosted substantially by terminal bonuses.

kingstreet

You at least need to find out from Standard Life if your plan has an Endowment Promise.

http://www.standardlife.co.uk/1/site/uk/help/existing-customers/mep

Showing the worth now doesn't have any significance to what the maturity value might be and what might be included. For example, the terminal bonus on a with profit policy might be a large slice of the final payout, despite it being non-guaranteed and only calculated on the final maturity value.

Oreo12_2

It would seem the Standard life final bonus is between £400/£700, TBH it doesnt seem worth paying it for another 5yrs only to gain that amount of money

GlynD

Oreo12 wrote: »

It would seem the Standard life final bonus is between £400/£700, TBH it doesnt seem worth paying it for another 5yrs only to gain that amount of money

That sounds incredibly small.

Oreo12_2

Thats what its stating on the policy, on the Friends Provident one it states the final bonus on Death would be £500 but that was calculated for Feb 13th 2011, im not sure if that changes for the policy maturing or not but i cant see that going up by very much in the next 5yrs.

I may be totaly wrong though :undecided

GlynD

Oreo12 wrote: »

Thats what its stating on the policy, on the Friends Provident one it states the final bonus on Death would be £500 but that was calculated for Feb 13th 2011, im not sure if that changes for the policy maturing or not but i cant see that going up by very much in the next 5yrs.

I may be totaly wrong though :undecided

That sounds like an old Industrial Policy (or one like it). Small premiums small savings. You're right. I would cash that in and stop wasting time on it.