Unitised with profit Terminal Bonus

PollyBunting

My unitised with profit endowment with Friends Life Co Ltd matures in a year. I just received an early surrender value for now, which includes a figure for a Terminal Bonus. I always thought you were penalised by a reduction in the Terminal Bonus if you surrendered early. Will the Terminal Bonus figure they've quoted just be a percentage of the final one at maturity? The original plan term was 25 years.

I'm so confused - I'd be grateful for help

COLOURBOUNCE

Join the club Polly. I posted last week the question of Terminal bonus rates. It was pointed out that endowment co's had not been paying these for years. Then I'm reading that many have been paying them in various percentage forms. I have no idea where it all sits now, sorry.

PollyBunting

Thanks Colourbounce

Now so many Financial Institutions no longer have a direct sales force the consumer struggles to find answers to simple questions as the administration teams that deal with queries are not fully trained, nor authorised to give advice. I've phoned Friends Life and, whilst they're pleasant and polite, don't seems to even fully understand the question I'm asking. I empathise with their situation i.e. being fearful of breaking FSA rules. Their way of dealing with the query is to take a note of it and send a letter which takes nearly 14 days to be received. of course if they haven't understood the query, the response doesn't provide the answer anyway.... so back to square one.

I'm new to this - can anyone help me find threads similar to my query?

Thanks

COLOURBOUNCE

You nailed it. I had exactly the same experience with Clerical Medical. Very polite but they had no idea what answers they could give. Alot of nervous silence and no real answers !!

kingstreet

Terminal bonus is a complete unknown. What's quoted on a surrender today may be completely different to what's given in a maturity in a year's time.

I don't think you are having problems getting information because of poorly trained staff or FSA rules, it's simply no-one knows what will actually be paid until the point they pay it.

Terminal bonus is expressed as a percentage of any annual bonus already allocated to the policy over the years it has been in force. It represents profits earned within the fund but not distributed as annual bonus.

COLOURBOUNCE

I understand the mechanics of the TB. But staff cannot even confirm what percentage TB is being paid on a similar policy that is maturing this week, that can't be right surely ?

dunstonh

But staff cannot even confirm what percentage TB is being paid on a similar policy that is maturing this week, that can't be right surely ?

What is a similar policy? unitised bonus rates vary on timescales, values and specific dates (someone starting 2 weeks later than you could get more or less even if everything else is the same).

Opinion or advice or non-factual information should be avoided by call centre staff.

PollyBunting

I think I'm sorted now having read a Guide to with-profits on their website and spoken to Friends Life again.

The maximum TB I'm eligible for is 50% of bonuses (bonuses are calculated as "kingstreet" says) I'm now eligible for 45% so am only losing out on 5%. I need to balance this against the amount of premiums I would be paying and any potential rise or fall in the unit price = an unknown. On today's figures there's not too much difference so I'm gonna go ahead and have my money now and not have the expense of paying more premiums.

I guess it's hard to calculate as, according to the Guide, payouts before maturity are calculated on between 85% to 140% of the asset share of your policy and at maturity on 95% - 160% of the asset share of your policy. Again lots of factors impact on this calculation.

I wonder Colourbounce if you could find the info you need (what percentage TB is being paid) on your providers website?

Thanks for all the help and I hope this helps others

kingstreet

PollyBunting wrote: »

I think I'm sorted now having read a Guide to with-profits on their website and spoken to Friends Life again.

The maximum TB I'm eligible for is 50% of bonuses (bonuses are calculated as "kingstreet" says) I'm now eligible for 45% so am only losing out on 5%. I need to balance this against the amount of premiums I would be paying and any potential rise or fall in the unit price = an unknown. On today's figures there's not too much difference so I'm gonna go ahead and have my money now and not have the expense of paying more premiums.

I guess it's hard to calculate as, according to the Guide, payouts before maturity are calculated on between 85% to 140% of the asset share of your policy and at maturity on 95% - 160% of the asset share of your policy. Again lots of factors impact on this calculation.

I wonder Colourbounce if you could find the info you need (what percentage TB is being paid) on your providers website?

Thanks for all the help and I hope this helps others

Don't forget the protection benefits you'll give up on surrender. Life cover and, if taken, critical illness cover, will be lost.

PollyBunting

Good point kingstreet for future readers of the thread. I no longer have need of the life cover and the plan didn't provide critical illness cover so in my case, all is fine.

Thanks

TrickyDicky101

COLOURBOUNCE wrote: »

I understand the mechanics of the TB. But staff cannot even confirm what percentage TB is being paid on a similar policy that is maturing this week, that can't be right surely ?

They wouldn't know - questions of what is similar aside, the staff can't just go fishing in the policy admin systems to discover what is being paid where (they have your policy number and you verifying you are who you say you are so they can only look at your details).