Advice on Aviva endowment please.

dartfrog

Hi all, my mum has a savings endowment with Aviva and she recently asked me to look at it and see if she should surrender it and invest the money elsewhere.

It doesn't mature for another 10 years and there is no final bonus guaranteed but the annual policy statement says they "may" pay one, this makes me think they won't but maybe that's because I'm a pessimist.

The bonus for 2011 was 0.5% of previous bonuses, so it doesn't even pay interest on the entire amount of money that is in there from monthly payments, only from previous bonuses.

It seems like a terrible investment from what I have read so far, but I don't want to make a bad decision without getting some advice from someone more knowledgeable than myself.

Any help would be very much appreciated, thank you.

EDIT*

After reading other threads on endowments I just wanted to note that the endowment is not linked to a mortgage or life cover.

dunstonh

It doesn't mature for another 10 years and there is no final bonus guaranteed but the annual policy statement says they "may" pay one, this makes me think they won't but maybe that's because I'm a pessimist.

They have to use the word "may".

The bonus for 2011 was 0.5% of previous bonuses, so it doesn't even pay interest on the entire amount of money that is in there from monthly payments, only from previous bonuses.

There are often multiple bonus rates. One applies to capital, one applies to bonuses already added and a final bonus that accrues as you go along but is variable.

It seems like a terrible investment from what I have read so far,

It could be but it is impossible to say from what you have told us as we may only be getting part of the information.

What is the current value and the surrender value?
How much is she paying?
What are the projected maturity values and the rates used on the projections?

dartfrog

Hi, thanks for the reply.

Yes regarding a final bonus the 2011 policy statement reads "We may also pay a final bonus, but this is not guaranteed."

Here is the full statement for 2011:

Sum assured: £10,867.00
Bonuses previously declared: £2147.51
New bonus: £10.74
Total bonus: £2158.25

Surrender value: 8411.81 (this was 7 months ago)

She pays £40 a month.

What are the projected maturity values and the rates used on the projections?

I can't find this anywhere on the statement, should I ring Aviva and ask for this?

Thanks again.

dunstonh

So, the current position is that it is valued at £13,025.25
If surrendered, she gets £8411.81.
Loss of £4613.44

Premiums left to pay around £4800.

What are the projected maturity values and the rates used on the projections?

They may not do them on savings endowments. However, you could ask for a projection to maturity. They will either say no or they will give one.

dartfrog

So the sum assured is how much the endowment is worth without any bonuses?

On a PDF on the aviva website found here
http://www.aviva.co.uk/adviser/product-literature/view-document.cgi?f=wc02187c.pdf

The explanation of the sum assured is "This is the basic guaranteed benefit on your policy and is dependant on you paying all future premiums until the original maturity date, unless you die earlier. Your policy schedule has more details on your sum assured"

I will tell my mum to ring up and ask for a projection.

What would your advice be at this point, is there more value to sticking with the endowments or moving the money elsewhere?

Thank you.