Selling Endowment policy

lindacd

I have a Legal & General endowment policy, with a significant shortfall.

Current surrender value is £25,000
Original Maturity projection = £46875
Current projections = £36300 @ 4%
= £41,100 @ 6%
= £46,100 @ 8%

I put in a claim to L & G regarding mis-selling and received £971 in compensation. I have received a quote for £25,800 from Surrenda-link to sell the policy. Any ideas on whether I am better off keeping the policy and taking a risk or surrendering it and either investing the money or paying off part of the mortgage?

Many thanks.

EdInvestor

Post this info for a view

Guaranteed sum assured
Declared bonuses
Maturity date
Monthly payment

Interest rate on your mortgage

lindacd

Thanks. Info as follows:

Original Issuing Life Office : Legal and General Assurance Society
Policy Type : Endowment Assurance
Maturity Date : 04/06/2013
Basic Sum Assured : £14,344.00
Total Bonuses & Declaration Date : £9,190.00 @ 31/12/2004
Gross Premium and last paid date : £74.10


Recent offer to sell was £26,916.00 (£1747 more than surrender value)

Interest rate on your mortgage = 5.1%

dunstonh

What is the terminal bonus? There has to be one because the annual bonuse and basic sum assured are lower than the surrender value. Surrender value is usually basic sum assured minus penalty for early surrender plus annual bonus plus any accrued terminal bonus. The surrender value would be lower than the current position but in your figures it isnt and this is why a terminal bonus has to exist.

edit: Just noticed you are using 2004 figures. You need to be more upto date than that as that two year period has seen significant growth.

Plus, a redress payment of only £971 suggests the endowment may not be in shortfall position at this point. If the surrender penalty is more than £971, then the endowment is in surplus to where you would expect it to be to hit target. Give or take a few pounds.

lindacd

Thanks for reply.

Total of basic sum assured and annual bonuses to 31 Dec. 2005 is £23,756.50 (last statement from May 2006).

Terminal bonus is £46,875