Made a loss on 10 year endowment plan

Le_Foot

Hi All,
My husband took out a 10 year endowment with Coventry Building Society, and it has just matured. He paid in £25 per month for 10 years..£3000 in total. The sum he is about to get back is only £2480, and that includes final bonuses. How can this be? We realised there wouldn't be much in the way of bonuses, but thought the intial deposit would be safe. Can this be right?
Thanks

atush

It may well have to do with the life insurance element? Not really sure as we don't know about your particular plan type.

opinions4u

Was it an endowment? If so, was it with profits or unit linked? If not, what type of investment is it?

Who is the life assurance company? Sounds like Coventry sold it, but it's plan provided by another company.

How can this be?

Investments can fall in value as well as rise.

Le_Foot

Not sure about the plan type..I will dig out the paperwork and see if I can glean more details, then come back on this one. Thanks.

Totton

I suspect it will be correct, in effect the investments have not generated a gain after costs whilst the life cover element has eaten away some of the capital. I held quite a few 10yr endowment plans and was disappointed in all of them at maturity, so much so that I have stopped doing them. However they did provide some level of life cover and gave me some lump sums that I would not have saved otherwise. Nowadays I have life policies and separate investment cash, the two no longer mix.

Ifts

Ive got something similar to this. My one is with Scottish Widows, on the paperwork it states its a Versatile Endowment plan (with-profits policy). I took it out nearly 20 years ago. I pay £50 each month into it, at the 10 year date I did have the option to cash it in early but I left it to run its course.

Next year at the maturity date, I would have paid £12000 into it (12x50 pa x 20 yrs). When I took it out, it had a Guaranteed Cash Benefit of £10,220.00 + any annual bonuses + any final bonus if I held it for the full 20 years. It did also provide death benefit during the term of £9000.

I don't know exactly what mine will return at the maturity date next year (21/10/2012), but my 2010 Bonus Notice states: Total Guaranteed Benefit = £13,521.12 (inc £10.220.00 Guaranteed Cash Benefit, £3,217.84 Existing Bonus, £83.28 2010 Bonus), so if I'm right I think they will apply another bonus for 2011 plus one for 2012 (whatever that may be), and possibly a final bonus at the maturity date.

As an added bonus back in 2000 when the insurer Scottish Widows was sold to Lloyds Bank, due to the Scottish Widows Demutualisation, I was eligible for a windfall payment which I received some 10 years ago now which was paid out into a SW VIP Premier Account for me, IIRC it was a few thousand pounds.

dunstonh

How can this be?

You may have heard about the credit crunch and global recession. If you havent then I suggest you read up on them. Pay attention to how the stockmarket fell over 40%.

As a side note, what on earth were you doing buying an endowment 10 years ago. They were obsolete 15 years ago. Are you sure its an endowment and not an ISA?