With Profit Endowment Policy

withprofitendowment

I would like to warn others against taking out a policy of this type. I have been paying monthly premiums since 1985. My policy is due to mature in 2013. What made this policy worthwhile is not the small sum assured but the revisionary bonuses built up over the years and the promised terminal bonus on maturity. This is now the second year no revisionary bonus has been paid on my policy. I have therefore paid premiums for two years with no increase in my investment. I also think is very unlikely that any terminal bonus will be paid on maturity. I therefore will receive little more than I have paid in over the years. If the policy is cancelled early only the sum assured is paid and the policy will have lost me money. A very poor investment

dunstonh

I would like to warn others against taking out a policy of this type.

I wouldnt worry about it. The last mainstream provider left the market for these in 2003.

This is now the second year no revisionary bonus has been paid on my policy. I have therefore paid premiums for two years with no increase in my investment.

Did you suffer the 40% drop when the markets dropped in 2007-2009?

A very poor investment

obsolete yes. Especially by todays standards. However, also a victim of poor timing.

Loughton_Monkey

I had several with profits endowment policies - all taken out in the 70's and 80's.

Excellent investments, the lot of them.

My last one paid absolutely miserable reversionary bonus for the last few years. Matured in 2009.

Reversionary bonus was 3.72986 times basic sum assured. Terminal bonus 5.01365 times basic sum assured. So the whole thing matured at 9.74351 times basic sum assured.

Lovely Jubbly.....

Whilst I may be wrong, I suspect you are labouring under a misconception. Quite a few years ago, with volatile markets, most with-profits funds decided to pay virtually all bonuses as 'terminal' rather than 'reversionary'. You may have a plesant surprise awaiting.

G51shopaholic

Who is policy worth?
Me & OH took ours out with General Accident in 1998 - 25 yrs are up in Jan 2013.

General Accident got taken over and I think it's now with Aviva - another bunch of cowboys!

They keep offering to buy us out at "cost" but we're in for the long haul.

dunstonh

Whilst I may be wrong, I suspect you are labouring under a misconception. Quite a few years ago, with volatile markets, most with-profits funds decided to pay virtually all bonuses as 'terminal' rather than 'reversionary'. You may have a plesant surprise awaiting.

That was a very common approach and it was done for liability and solvency issues as it allowed them to have some equity content rather than the other approach which was to move virtually or even fully in to low risk cash and bonds.

Sobraon

I'm still getting a zero regular bonus rate from a Scottish Widow's endowment pension plan and the terminal bonus rate looks to be about 10%. Whoopee! (yes there is a GAR on the policy).

funnyguy

I have just got a letter from PRU.stating my final maturity payment will be £8111 payable 1st August.[Yippee].Yet last years quotation showed about £7500.so your maturity terminal bonus might be quite high.I had been paying £16.50 per month for 15/16 years.Was going to be for my daughters wedding/but in these days of just living together,its gone to a new car..

atush

G51shopaholic wrote: »

Who is policy worth?
Me & OH took ours out with General Accident in 1998 - 25 yrs are up in Jan 2013.

General Accident got taken over and I think it's now with Aviva - another bunch of cowboys!

They keep offering to buy us out at "cost" but we're in for the long haul.

they wouldn't offer to buy you out if it was in your interest. You must have a GAR or some other goodie in your policy.

zygurat789

I took one out in 1975, when it matured I was rather pleased.
I enquired as to why they were now performing so poorly and was told that it was the result of low inflation, one of the best inflation hedges being ordinary shares. Seemed a reasonable explanation.

sandsy

Funny how the world changes and moves on...
Everyone used to love with profits when we lived in times of high returns.....

dunstonh

I enquired as to why they were now performing so poorly and was told that it was the result of low inflation, one of the best inflation hedges being ordinary shares. Seemed a reasonable explanation.

The plans with guaranteed annuity rates are mostly with profits. Most with profits funds are now invested on the basis of financial solvency rather than growth. So, you tend to find they are mostly gilts and fixed interest with only a tiny bit of equity.

The best ones are the unit linked plans with GARs. Scottish Life have a bunch of those. All the upside potential (and downside) with GARs attached

Everyone used to love with profits when we lived in times of high returns.....

True. I remember people specifically asking for WP plans rather than unit linked.