Standard Life endownment: 13 yrs old - cash in or not?

barneybeagle

Since Feb 1994 I have been paying £76.09 into a Standard Life Endownment that was supposed to pay off our mortgage of £52,000 by Jan 2019. I've received all of the docs on it not going to make the amount due to the market conditions etc. and that there would be a shortfall.

Here is a list of how it has performed since 99:

1999 £3665.69
2000 £4682.37
2001 £5740.07
2002 £6846.21
2003 £6578.95
2004 £8448.16
2005 £9984.87
2006 £11584.07
2007 £? (due in Feb/Mar 07)

I'm thinking of cashing it in due to us having accumulated debts of around £80,000. £60,000 is on a new repayment mortgage at a five year fixed deal of around 5.4% and the other £20,000 is bandied around on 0% apr Credit cards doing the tarting lark.

I know that the endownments are picking up again, but I'm unsure what to do. Should I continue to pay the £76.09 per month in the hope that it is going to claw back the lost amounts or cash it in now? If I leave it will Standard Life give so much towards the shortfall or is that promise been binned now? My thought is just to cash in and pay off a big lumper off the mortgage to bring down the monthly payments?

Any advice would be truly appreciated.

Cheers
bb

EdInvestor

Is this a unit linked or With profits endowment?

Post some more info

Guaranteed sum assured
Declared bonuses
Surrender value
Maturity forecasts
Mortgage interest rate

barneybeagle

Thanks EdInvestor, I'm away at work and don't have that info at hand at present, so I'll post more info in a couple of weeks on this.

However, I'm sure it is a with profits fund and what I have listed is the guyaranteed sum assured. My mortgage interest rate is now 5.4% over 5 years fixed.

Regards
bb

barneybeagle

Here's the bumpf if anyone can give me advice:

Mortgage Endownment
Life With Profits Fund
Started Feb 94
Matures Feb 19
Amount payable on death = £52,003.
Monthly payment = £76.09

As of Feb 06 (As per first posting at the top of the thread). the fund was worth £11,584.07.
The final bonus was £397.79
Regular With Profits bonus from 1st Feb 05 to 1st Feb 06 was 2%.

1999 £3665.69
2000 £4682.37
2001 £5740.07
2002 £6846.21
2003 £6578.95
2004 £8448.16
2005 £9984.87
2006 £11584.07
2007 £? (Statement due in Mar 07)

The Standard Life Mortgage Endownment Promise as of October 2004 says it will pay out between £2241 and £3362 on maturity.

As of Feb 2006 if my plan was to grow at 4% it would be worth:
£28,000 on maturity with a £24,003 shortfall.

If it was to grow at 6%:
£33,600 on maturity with a £18,403 shortfall.

If it was to grow at 8%:
£40,300 on maturity witha £11,703 shortfall

Target is obviously £52,003.

My new repayment mortgage of £60,000 has an interest of 5.39% which I plan on paying off over 10 years. I have the 5.39% deal over a fixed 5 year deal.
Should I cash in and pay the sum of the mortgage or let it run. I know no one can forecast the future, but any good opinion would be appreciated.

Thanks in advance
bb

EdInvestor

Hi BB

Please update the surrender value (over the phone), as it will have benefited from the demutualisation, and then we can do a calculation..

barneybeagle

Hello Ed,

Thanks again for your swift reply.

I've just came off the phone with Standard Life and the surrender value of the policy as of today 9th March 07 is £13,707.49.

I asked the lass if the policy will have benefited from the demutualisation and she says not directly as we have already had the shares dished out of which I'm still holding to get the freebies in a few months time.

Cheers
bb

EdInvestor

barneybeagle wrote: »

The Standard Life Mortgage Endownment Promise as of October 2004 says it will pay out between £2241 and £3362 on maturity.

As of Feb 2006 if my plan was to grow at 4% it would be worth:
£28,000 on maturity with a £24,003 shortfall.
If it was to grow at 6%:
£33,600 on maturity with a £18,403 shortfall.
If it was to grow at 8%:
£40,300 on maturity witha £11,703 shortfall

If you cashed this one in and reduced the mortgage with the lump sum, also increasing the mortgage payments by the amount of the endowment premiums to maturity, your return at the current rate of 5.39% would be 41,014 - with no risk.

This would beat all the SL projections, including the one @8%, though they might be able to match it if the mortgage promise delivered.

You may like to see if you can get a better return by selling it.Try https://www.apmm.org for a quote - they might give you an extra 10%.

barneybeagle

Thanks Ed Investor, I'll try and see what offers I get for it on that website you mention and I'll let you know.

Cheers
bb

barneybeagle

I applied to https://www.apmm.org. They sent me a letter asking me to phone them up. When I phoned the guy on the other end told me that no-one wanted my policy as it was 'unitised' with profits and is linked with the performance of the stock market.

I thought they were all linked with the stockmarket? so what is the difference? It goes to show that it cannot be much cop if the market makers don't want to touch it.

Anyway I'm really thinking about cashing in now and throwing the lot of my mortgage. Will there be any capital gains or anything to pay on this?

Replies appreciated once again.

Thanks
bb

dunstonh

unit linked or unitised has a daily value. There is no guaranteed sum assured that is only paid out on maturity. So, there is no point someone paying more.

Its a bit like asking someone how much will they offer you for a £10 note.

Will there be any capital gains or anything to pay on this?

Only if its less than 10 years old (in most cases).

silvercar

remember that the endowment policy provided life cover that you should look to replace with a stand alone policy. If your health is not good, this may be a benfit you can't afford to lose.