Should I surrender SL Endowment Assurance & Homeplan

toonfish

Mr_helpful wrote: »

So lets be clear Eds advice is to cash in all 3 endowments which have already paid upfront, charges for a much longer term, sacrificing bonuses which are now being added without such a heavy effect of charges and life assurance and at a time when SL are increasing terminal bonuses.
With the OP getting rid of mortgage the better question is will her money beat inflation and by keeping the endowment for the last few years it almost certainly will. I would believe Dunston and James anyday over this biased and inaccurate advice to cash in the endowments.

exactly on the money - and one of the dangers of this site is that people have very set views on things - every situation is different and needs to be considered individually

danh73

I haven't read through all the posts on the forum but Standard Life were the market leaders 5 years ago paying a huge terminal bonus. Unfortunately the FSA decided their risk in equity was too great and they were forced to sell it at the bottom of the market, thus massive reductions in terminal bonuses. 98 They paid a TB of 172% of the SA and RB for a 25 year term. now they pay 21%. I appreciate some of you have mentioned about the large element is made up of TB, but I can't see anything happenning to Standard Life TB's for a long time. Not in an upwards sense anyhow.

The SV's at the moment equate to a rough return of 4%Per annum. You can do better elsewhere. My company sold theirs off to a fund. The fund have now stopped buying them.

dunstonh

I appreciate some of you have mentioned about the large element is made up of TB, but I can't see anything happenning to Standard Life TB's for a long time. Not in an upwards sense anyhow.

There was quite a jump earlier this year.

The SV's at the moment equate to a rough return of 4%Per annum. You can do better elsewhere. My company sold theirs off to a fund. The fund have now stopped buying them.

That is incorrect.

Using endowment 1 again, the current position is over £24,000 plus final bonus (which we still dont know). That could easily take it to £26k-£28k.

The surrender value is £10094. The cost to keep going until maturity is £5700.

Can you tell me of an investment that will turn £50.59 over 9 years (£5,700) into £16,000 (possibly more)?

xtratime

I am in a similar position to the OP. I have a with profits (25 year) and unit linked (22 year) SL endowment both with around eight years to run. Having converted part of my morgage to a repayment about four years I am now in the position whereby the surrender value is enough to cover the interest only part of the morgage. I have been toying with the idea of surrending/selling both over the past few months and have been watching thread similar to this with interest. Differing opinions regarding SL policies have made this decision more difficult (I know everyones circumstance are unique) but I am tending of agreeing with Dunstoh on the possible direction of whch to take.

In the case of the with profits policy, the sum assured plus bonuses delcared plus the bottom value for the endowment promise are already almost matching their projection for the 4% rate showing how flawed these projections are.

Gorgeous_George

dunstonh wrote: »

There was quite a jump earlier this year.


That is incorrect.

Using endowment 1 again, the current position is over £24,000 plus final bonus (which we still dont know). That could easily take it to £26k-£28k.

The surrender value is £10094. The cost to keep going until maturity is £5700.

Can you tell me of an investment that will turn £50.59 over 9 years (£5,700) into £16,000 (possibly more)?

But it isn't turning £50.59 into £16,000 (possibly more).

<::: Disillusioned :::>

If you think it is, maybe I should be the IFA.



GG

jamesd

dunstonh wrote: »

The surrender value is £10094. The cost to keep going until maturity is £5700. Can you tell me of an investment that will turn £50.59 over 9 years (£5,700) into £16,000 (possibly more)?

The future value of 10094 plus 50.59 at 7% over 9 years is 26544. At 8% it's 28705.

Those appear to be fairly reasonable expected returns for the endowment which could also be exceeded by other methods of investing, with greater risk.

dunstonh

Gorgeous_George wrote: »

But it isn't turning £50.59 into £16,000 (possibly more).

<::: Disillusioned :::>

If you think it is, maybe I should be the IFA.



GG

The current position is around £26,000 (sum assured, current bonuses accrued, mortgage promise and terminal bonus). The surrender value is around £10,000. So, you have a £16,000 difference.

To get that £16,000 difference (ignoring future returns for now) you have to pay the £50.59 for another 9 years. Thats around £5600.

So, if the endowment is held until maturity, it will cost another £5600 odd in premiums to be paid but the amount got back will be around £16,000 more than the current value (ignoring future returns).

Hence the comment that from this point on you are spending £5600 to get £16,000. (excuse the rounding of the figures purely to save me scrolling up the thread).

Any alternative has to cover the loss of the product you are coming out of before you see any profit. So, the alternative in this case has to make up that difference. There could be alternatives that could do that as Jamesd suggests. So, you cannot rule it out as an option. However, the SL endowment has a fair amount of guarantee in there in that the guaranteed sum assured and the annual bonuses cannot be taken away. The promise value is unlikely to be taken away as SL have funded for that now. They account for the bulk of the figure. Sticking the money in a bank or building society account though is unlikely to beat the endowment. It would take risk based investments performing well to do it.

EdInvestor

The best way to get an impartial idea of whether your endowment is worth more than the surrender value is to see if you can get a TEP trader to offer you more money for it.

You can apply to them all at the same time here:

https://www.apmm.org

Mr_helpful

And if it is worth more you can be damn certain its future growth is going to be quite a bit more than what you expect it to be otherwise they wouldnt be lining up to buy it. Why dont you get the profit not someone else?
Virtually every thread with a comment as to whether one should sell a with profits policy is met with EDINVESTOR saying sell it through apmm. Im just wondering if she is busy buying them and making a killing.:D

EdInvestor

No connection, just saving MSEers time and energy. I wouldn't personallly bother investing in endowments, the returns are too low.The Association provides a helpful service as you can get sale quotes and compare prices all in one spot.

The Association of Policy Market Makers (APMM) consists of member firms who buy and sell with-profits endowments and whole-of-life policies.

The Association was founded in April 1992 to:

* Promote awareness and understanding of the TEP market;

* Ensure that the highest professional standards are maintained by members and that they adhere to the Association’s Practice Guidelines;

APMM and all its members are regulated under the Financial Services and Markets Act 2000 by the FSA. They all have well–established trading records and also carry Professional Indemnity Insurance.

Association members source and analyse appropriate policies, which are then offered for sale as investments. Apart from one auctioneer, the members are Market Makers – buying or selling on their own account or as agents for third parties on whose behalf they have authority to execise discretion.