Is it worth cancelling this endowment plan & investing elsewhere?

Nine_Lives

My mum took out an endowment plan in '99. The interest it is receiving is abysmal.

Thing is, i don't fully understand all the terminology.

Here's what she received for her most recent statement:



Where it says current revisionary: £0.37, previous years have been as follows:
2009: £0.37
2008: £11.13
2007: £11.07
2005: £0.62
2004: £0.61
2003: £11.01

There's 2 missing i know.

There's penalties to be incurred by cancelling early, but would it be beneficial to cancel this & invest elsewhere (wherever else it may go, i THINK she will still pay £15.00 per month into, no more, no less).

holly_hobby

Obviously if you can source a suitable investment vehicle, providing a guaranteed return higher than that achieved, which will also recoup the cancellation costs incurred,and includes life cover at the same amount and cost, then of course Mum may reason it would be better to seek another home for her £15.00 pm - as any comparision must be on a like for like basis to be a true reflection of benefit.

Financial advice re appropriate providers etc is not permissible, so Mum may want to have a chat with an IFA to have them evaluate her financial situation, requirements and ATR in order to source (if possible) a suitable and appropriate replacement to warrant cancellation of her current arrangement, without the risk of they be guilty of churning the policy.

Hope this helps

Holly

McKneff

Only 3 years to go, dont forget, whilst this policy is in place you mum has valuable life insurance and has had since the inception of the policy, handy if she has no other life insurance should the worst happen with no savings and no money to pay for a funeral

Nine_Lives

I >think< she has life insurance on another policy of a higher amount.
With the recent death of my dad, she has his savings which will be coming to her which is 20k+ i think.
She's also been talking about paying for her funeral NOW as she's been told it's possible to do this. Prices are only ever going to rise, so she was looking at paying for it now.


She said that once this matures, the funds are to be split between my brother & sister. I think that's all she took it out for - a 'savings' policy for them & when matured, they will get 50:50.

holly_hobby

I would not recommend purchasing a funeral package, unless there is financial protection in the event of the provider or group, ceasing trading, which I don't think is offered.

Better to deposit the monies into a savings vehicle/account - which will provide financial protection under FSCS regs in the event of the bank or b society falling into troubled waters.

Hope this helps

Holly