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Pru Endowment advice

alimbee
Posts: 62 Forumite
We were considering surrendering our Prudential endowment, when I called to ask for surrender value, Pru said their policy is to pass details on to APMM for valuations for their customers.
We have been offered widely different values ranging from £17,010 to £18,820.00, which has confused us on what to do.
Some details of the policy:-
Guaranteed sum assured £13,230.00
Total bonuses (at Dec 2005) 5725.33
Maturity date 01 Jan 2016
Monthly payment 52.82
Surrender value £15,899.20
Why would a company offer more than £3000 over the surrender value and should we be considering keeping the policy?
We have also been offered an auction sale of the policy with a reserve of £18,916 - are there any disadvantages with auctioning the policy?
Can some one help with advice on our best option - we are very confused as to the best option.
Thanks
We have been offered widely different values ranging from £17,010 to £18,820.00, which has confused us on what to do.
Some details of the policy:-
Guaranteed sum assured £13,230.00
Total bonuses (at Dec 2005) 5725.33
Maturity date 01 Jan 2016
Monthly payment 52.82
Surrender value £15,899.20
Why would a company offer more than £3000 over the surrender value and should we be considering keeping the policy?
We have also been offered an auction sale of the policy with a reserve of £18,916 - are there any disadvantages with auctioning the policy?
Can some one help with advice on our best option - we are very confused as to the best option.
Thanks
0
Comments
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alimbee wrote:
Why would a company offer more than £3000 over the surrender value and should we be considering keeping the policy?
Basically because the Final Bonus (or Terminal Bonus) may be quite significant when the policy matures! Many of these companies are announcing their bonus structures about now on policies that are about to mature. If I'm right many endowments suffered due to stock market losses at the start of the millenium, but now that the markets have improved, so have some of their bonuses.
I am no expert and cannot advise whether or not to hang on/sell/surrender. I am sure that one of the many experts on here can/will though!
JtA0 -
Why would a company offer more than £3000 over the surrender value and should we be considering keeping the policy?
Pru have yet to fail to hit target on endowments. In 2005 100% hit target with the average surplus being £2200. In 2006, they were on track for 100% again with £3300 being the average surplus.
They are worth having.
Your endowment value from 2005 was already at: £18,955. 2006 is going to be higher.
So, the firms offering to buy are still getting it cheaper than its 2005 value, let alone the 2006 one.I am an Independent Financial Adviser (IFA). The comments I make are just my opinion and are for discussion purposes only. They are not financial advice and you should not treat them as such. If you feel an area discussed may be relevant to you, then please seek advice from an Independent Financial Adviser local to you.0 -
Please post the maturity forecasts from the Pru on its value at maturity.What interest rate are you paying on your mortgage?Trying to keep it simple...0
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Thanks for your help.
Maturity forcasts
4%0 -
Maturity forcasts
4% £28400
6% £33,100
8% £38,700
Our mortgage rate is 4.99% but we are coming to the end of our tie in at the end of April and my oh has become self employed recently so I am not sure what rate we will be able to get.
Thanks0 -
alimbee wrote:Maturity forcasts
4% £28400
6% £33,100
8% £38,700
If you cashed the policy in and used the moeny to reduce the mortgage @5%, also paying in the premiums to maturity you would end up with 31,866.
If you did the same @a mortgage rate of 5.5% the return would be 33,112.
This policy will probably cover the mortgage, but there's not much extra reward in there for taking a risk.
But I would suggest you are cautious about any apparently high offers from traders where they won't pay you until they find a buyer. This can mean you wait a long time.Trying to keep it simple...0 -
Pru is probably good for between 6% and 8% as an average. Plus you have the life cover benefit as well.
If you surrender/sold it, you would need replacement life cover and the cost of that needs to be factored in.I am an Independent Financial Adviser (IFA). The comments I make are just my opinion and are for discussion purposes only. They are not financial advice and you should not treat them as such. If you feel an area discussed may be relevant to you, then please seek advice from an Independent Financial Adviser local to you.0 -
So would you recommend that we sell the policy, as it seems that it will def not make target? Would selling by auction be our best bet with a reserve price?
If we sell are we better to sell now or wait till Pru announce the bonuses and when would that be? Would that make any difference to the value for sale purposes?
Sorry for so many questions!0 -
So would you recommend that we sell the policy, it seems it will def not make the target.
If we sell would it be better to wait till Pru announce the bonuses or will that not make any difference to the value?0 -
So would you recommend that we sell the policy, it seems it will def not make the target.
What is the target?
If we sell would it be better to wait till Pru announce the bonuses or will that not make any difference to the value?
It could make a lot of difference. NU plans have jumped between 5 and 10% with their bonus announcement overnight.I am an Independent Financial Adviser (IFA). The comments I make are just my opinion and are for discussion purposes only. They are not financial advice and you should not treat them as such. If you feel an area discussed may be relevant to you, then please seek advice from an Independent Financial Adviser local to you.0
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