Sell my endowment policies ??

mbee123

I have 3 seperate endowment policies which I am considering selling, details below, please advise whether I would be better off selling up and using the money to pay off my mortgage or sticking with them.

I have approximately 40,000 left on my mortgage which is at a rate of 5% although I will proably be switching at the end of the month as my discount rate + tie in will run out then.

All Standard Life Endowment policies with profits, figures are from Feb 06, details below:-

Policy 1
Guaranteed sum assured - £18500
Declared bonuses - £3,662 to date + £6,013 sum assured (Min payment at maturity - (£9675)
Surrender value - £6732 as of Aug 06
Monthly premium - £24.86
Maturity date - 21/06/2014
Maturity forecasts - 3.75% - £10300, 5.5% - £11,700, 7.5% - £13,200

Policy 2
Guaranteed sum assured - £25500
Declared bonuses - £3,728 to date + £8,288 sum assured (Min payment at maturity - £12,016)
Surrender value - £7,120 as of Aug 06
Monthly premium - £33.13
Maturity date - 10/07/2016
Maturity forecasts - 3.75% - £12800, 5.5% - £14,900, 7.5% - £17,300

Policy 3
Guaranteed sum assured - £28000
Declared bonuses - Fund value - £7190 (no final bonus available)
Surrender value - £8200 as of Aug 06
Monthly premium - £82.24
Maturity date - 02/10/2016
Maturity forecasts - Low - £20,100, Medium - £23,100, High - £26,500

Appreciate dates are a bit out, let me know if more details are needed

Thanks for any help...

mbee123

Anyone ???

EdInvestor

Please update the surrender values? Quick phone call should do it.

mbee123

Updated surrender values:-
Policy 1 - £6962.45
Policy 2 - £7362.85
Policy 3 - Not available immediately as it is a different type of policy, they will calculate and let me know but fund value as of today is £8023

Thanks for any help...

dunstonh

I think its fair to use 5.5% as the guidence figure for SL in this case.

It may be worth waiting until after February when SL make their bonus announcement. Those that have announced already have seen good gains. It doesnt mean yours will and many see this bonus announcement as a test for SL and their strength and resolve on the WP front.

EdInvestor

mbee123 wrote:

Policy 1
Maturity forecasts - 3.75% - £10300, 5.5% - £11,700, 7.5% - £13,200

If you surrendewre3d this one and used the lump sum to reduce the mortgage, also paying in the premiums to maturity @ a rate of 5.5% youre return would be 12,681, which looks to be approx equivalent to a 6.5% return at SL ( which they have no hope of achieving).

Policy 2
Maturity forecasts - 3.75% - £12800, 5.5% - £14,900, 7.5% - £17,300

Same calculation for the above policy produces a return @maturity of 16,509, very similar

There's really no risk premium left here, best to bin them IMHO unless you would have real problems replacing the life cover at reasonable cost (if you need to).

mbee123

Thanks v much for the advice, I have asked the APMM to get me some offers for the first 2 policies...

They are not interested in the 'Unit policy', any ideas who would be interested in purchasing this type of policy ?

EdInvestor

You can't sell a unitised policy, you'll have to surrender it.

dunstonh

unit linked plans have a daily value and there is no retained value which you only get on maturity. There is no reason to pay over the odds for plan with a daily value as the could just go out and buy the amount themseves if they wanted to.

That doesnt make unit linked plans bad. Indeed, unit linked endowments of 20 years or more are expected to hit target unless they have a silly target growth rate attached to them.