Should I surrender my Pheonix endowment t

Sir_Render

Hello. I have a Pheonix endowment, 25years, maturity date 8th Dec 2014. At the moment, the Guaranteed sum assured is £18360 and the total bonuses to date £10260 = £28620 assuming no further growth. Last two years, the new bonuses have been just £71. Monthly premium is £78.20.

I called today and was quoted a surrender value of £33,178 which apparently includes an element of final bonus. I was pretty happy with that number.

Here is my maths:
If a surrender now, I get £33,178. Plus I save £78.20 x 36months (the remaining premiums) = £2815. It doesn't seem like I would lose out much by surrending now, especially give two years bonuses at less than £75 per year.

Here's the clincher:

I have some expensive credit card debts totalling £16000. The interest alone on this amount is £150 per month, which I would clearly save if I were to pay them off.

So: £150x36 = £5400 of saved interest charges if I surrendered and used half the surrender value to pay off my cards.

So the question is - should I do it? Seems like I should, but I'm hoping some experts out there can point out any pitfalls, or things I might have missed.

By the way I have no mortgage (now in rented accommodation) and life cover is not important as I get that through my employer.

Thanks for any advice you can give!!!!

Thrugelmir

You do have the option of making the policxy paid up, i.e. paying no further premiums. This may well mean that you receive a higher final bonus.

By not paying premiums this releases funds to pay your debts with.

Sir_Render

Thanks Thrugelmir. I did wonder about that, but an extra £78 per month isn't going to clear £16k any time soon. Only the lump sum would do that.

What I am thinking is this: People advise that if you have savings and debt, particularly expensive debt, you should use your savings to pay off your debt. I am beginning to think of my endowment as savings given the seemingly rather good surrender value. And I'm thinking that whilst I might lose say 4% growth on £30k for 3 years, if a surrender I will avoid spending 24% on a balance of £16k for that same 3 years.

opinions4u

Which company offered the policy originally (as in before Phoenix bought up all their life companies)?

Is there any sort of mortgage guarantee included in the policy?

What are their current temrinal bonus rates for a policy of the same term?

Assuming the answer to the second question is none, I'd probably surrender and clear the debt. But the risk is that you might miss out on a chunky terminal bonus. So if you do make that decision, make sure you don't find out what the terminal bonus is in a couple of years time!

Meeper

Terminal bonuses can be adjusted or removed at any time, so you may gamble on it being bigger in 18 months or whenever and actually it may be smaller or non-existent. A bird in the hand is worth two in the bush. If your endowment is no longer anything to do with the mortgage and unless it holds any kinds of guaranteed value on maturity (unlikely), then I'd go with your plan.

Sir_Render

Thanks folks! So the policy was originally Royal Life. I can't find the original policy documents, so I'm not sure if there is any mortgage guarantee.

Dick_here

Sir_Render wrote: »

If a surrender now, I get £33,178. Plus I save £78.20 x 36months (the remaining premiums) = £2815. It doesn't seem like I would lose out much by surrending now

How do you know ? You don't know what a current equivalent maturity is paying out. That is what you need to ask them prior to making any decision.