Friends Provident Endownment

Sting_2

My dad took out an endownments for me (and my two sisters) in 1986. I'm not sure why, but I am guessing it was as a savings plan for us. He often quoted that is was to pay for our funerals should we die.

Anyway, my dad died in 2004 and my mum continued to make the £10 monthly payments into the endownment. it is set to mature in 2011.

My mum's (tied) financial advisor suggested it would be best for us to cash in the endownment (they are in our names) and take what the fund is worth. Now I have read about FP endownments and the comments made from the experts on this forum (you know who you are!) and they seem to suggest that FP endownments are poor.

So my question is, since I am not short of money, and I often have money left at the end of each month, what should I do? Firstly should I stop the endownment and take the money (don't worry about what I will do with it then) or should I leave it (assuming my mum has been ill-advised) or is it possible to transfer it to a better fund within FP?

Thanks in advance for your help.

dunstonh

we dont know the facts of figures so doing an analysis of the product is not possible. If the adviser that has seen the endowment plans is independent, then he/she should have done a review of them and made the recommendation after that. If he/she is tied, then they are not authorised to recommend cancellation of the plan as it is outside their scope of authority and are probably taking a guess.

That said, they are pretty poor quality on the with profits fund and it could easily be the right decision to withdraw.

When the adviser wrote to FP to get the information about the FP plans, one of the questions they would have asked is if other funds are available and what they are. Switching funds can be a good way to get better quality investments without incurring heavy surrender penalties. Not all plans (particulary saving endomwents) have access to multiple funds.

Sting_2

Thanks for the reply.

Sorry for the sketchy details, I don't have any of the numbers to hand. I will post them as soon as I do.

EdInvestor

These are the extra ones you need

Guaranteed sum assured
Declared bonuses
Surrender value

Sting_2

Thanks for your replies so far, here are the details....

Start Date: June 1986
Term: 25 years
Payments: £10/month

Surrender Value: £4830 (as of 22/1/2007)
G'teed Sum Assured: £2525
Decalred Bonus: £1908.51

May also be worth considering I got 348 FP shares a few years back!

Hope this helps. Was thinking it might be best to surrender it and invest the money in a Equity Isa.

Any thoughts as to whether this endownment might be worth something as a TEP (think that is the term for selling it on.)

Thanks for your help.

EdInvestor

If you cashed it in and put it on deposit @4.5% net also paying in the premium to maturity you should end up with 6,286 at maturity.

Ask them for the forecast maturity value of the policy @4% and 6% growth. If it is lower than this, then I would cash it in.

I don't think anyone is interested in buying FP policies but you could try here:

https://www.apmm.org