Anyone with a 25 year endowment which matured recently ?

jump_to_it

Had the result of my 25 year Aviva 25 year endowment which matured on the 11th December 2017.
Policy originally taken out with Commercial Union on 11/12/92 to cover target amount of £42,000, on my first home, monthly payment of £51.02.
Luckily I was not relying on this to pay my current mortgage, just kept it as a savings plan as was not missing the monthly payments.

Maturity values are -
SUM ASSURED - £11,937.00
REGULAR BONUS - £7,026.87
FINAL BONUS - £8,451.06
MORTGAGE ENDOWMENT PROMISE - £7,430.00

Final Maturity Value was £35,088.03

Short of the target amount but was expecting it to be less than this so anything above my expectation is a bonus.
Hope this info helps others waiting to hear on their results.

Arkers

Jump to it, many thanks for the update I have a similar policy that was originally General accident and now Aviva. I don't think the maturity value looks too bad, I hope you enjoy every penny.

Arkers x

silvercar

Standard Life 25 yr policy. Paid in £60 a month.

Maturity values are -
value of life with profits units - £18k
FINAL BONUS - £11.8k
MORTGAGE ENDOWMENT PROMISE - £10.1k

Total ~40k. So that is a 6k shortfall.

I'm actually flabbergasted, indications a year ago were that the MEP would be between 4 and 6k.

Actual return 5.664% plus it obviously gave life insurance.

GAry

silvercar wrote: »

Standard Life 25 yr policy. Paid in £60 a month.

Maturity values are -
value of life with profits units - £18k
FINAL BONUS - £11.8k
MORTGAGE ENDOWMENT PROMISE - £10.1k

Total ~40k. So that is a 6k shortfall.

I'm actually flabbergasted, indications a year ago were that the MEP would be between 4 and 6k.

Actual return 5.664% plus it obviously gave life insurance.

---

My 25 year Endowment (Homeplan) has just matured on 28 Jan 18.

Sum assured: £45000
£59.80 per month.

Maturity:
Life with profits units = £19522
Final Bonus = £12623
MEP = £6600
Total = £38745

My calc of return = 5.53%

Earlier statements/projections:

Jan 2017:
Higher rate est = £32300
Mid rate est = £31400
Low rate est = £30500
MEP est= £2640-£3960

Dec 17:
Est = £31996

Interesting that there is a big difference in the MEP payout on a policy with 20 pence difference per month. Obviously there are other factors (low cost endowment, life cover, age, etc), but still begs the question why!

silvercar

Interesting that there is a big difference in the MEP payout on a policy with 20 pence difference per month. Obviously there are other factors (low cost endowment, life cover, age, etc), but still begs the question why!

Firstly I must own up to rounding my figures, the difference is more like 70p than 20p.

Secondly, your unit value and final bonus are higher, possibly explaining why your MEP was lower - our final payment is only different by a little over £1k.

Our ages will effect the life cover, and mine was a joint policy with my husband, so the life cover was payable on first death. So more of my monthly payments would have gone towards the life cover.

I really can't explain why I've had a projected MEP of 4-6 for years and why the final payment was so much higher. dunstonh is the MSE expert, maybe he can shed light.

dunstonh

Not all endowments have the same target growth rate. Right back at the start, the target rate could be set to a desired figure. A higher target growth rate would see lower premiums (and greater shortfall) and vice versa. This would also have an impact on the MEP as that was based on the mid rate projection.

For the last few years, the projections used by life companies has been set really low (regulator decision). This has brought the projections down. But real returns have been higher than that and has made more than 6%p.a. in recent years, it has allowed a greater MEP to be paid.

When we used to get endowment projections from Std Life, each year the MEP gave a range. However, the range varied from year to year. So, it was never a min or max but a guide based on current position and lower than reality assumptions.

GAry

dunstonh wrote: »

Not all endowments have the same target growth rate. Right back at the start, the target rate could be set to a desired figure. A higher target growth rate would see lower premiums (and greater shortfall) and vice versa. This would also have an impact on the MEP as that was based on the mid rate projection..

When my policy was taken out in 1993 the financial adviser quoted a premium of £50.60 for a sum assured of £45k with a growth rate of 8.50%. It was a single life policy. I was not convinced that an investment of 25 years would return consistent performance at this level and requested that the sum assured remained the same, but I increased the monthly premium to reduce the required growth rate. The required growth rate thus became 7.90%.
In 2001, I queried Standard Life about this and the MEP. My action of increasing the premium, to reduce the risk of a shortfall in the final payout, seems to only have reduced the risk to Standard Life and the payout under the MEP. I wonder what the final sums would have been if I had left the required growth rate of 8.5% as advised at the time?

dunstonh

When my policy was taken out in 1993 the financial adviser quoted a premium of £50.60 for a sum assured of £45k with a growth rate of 8.50%.

Ouch. I was doing around 4.7% by then.

the risk to Standard Life and the payout under the MEP. I wonder what the final sums would have been if I had left the required growth rate of 8.5% as advised at the time?

It is difficult to say. However, your actions would have reduced the MEP.

GAry

dunstonh wrote: »

It is difficult to say. However, your actions would have reduced the MEP.

That is what I thought. My extra (nearly) 20% has probably only had the effect of reducing the MEP payout by Standard Life. I projected this outcome in 2001, but Standard Life did not really respond properly to it when I raised it with them.

silvercar

I can see that of my annual premiums, £138 (a year) was the cost of life cover. Yours would have been less as a single life policy.

We also received shares along the way, so the value of those needs to be included as a notional payout. I've dug out the paperwork, my assumed growth rate was 8.5% too.