Endowment policies help please!

hellesbelles66

Hi, just wondering if anyone has any thought on these endowment policies or could point me in the right direction for advice please.

I'll try to keep it brief.

My ex-husband and I were sold 3 endowment policies in 1988 (one for my life cover, one for his and a joint one) in order to pay off our mortgage in 2023. Now as we all know that is not going to happen:(.- but being young and naive it sounded great.

We divorced 17 years ago and he has not been seen since so I have paid the mortgage and policy premiums myself. In the divorce I was awarded the home and the policies as we had 4 young children at the time. However it has taken me with the "assistance" of several useless solicitors all these years to get the correct paperwork signed.

Sorry, this going on a bit....

Finally, (yippee!) it is going to court for the judge to ensure that everything is transferred to me properly. So, my solicitor has suggested this is the time to look at the mortgage. I now have several options:

Do I continue paying for the policies for the next 11 years but not know if I'll even get what I'll pay in?
Cash in the policies and pay a lump sum off my mortgage?
Try and find a reputable company that buys policies?

Sorry for the ramble, but after waiting all these years I'm now confused at what to do next.

If you've managed to trawl to the end, thanks for reading and any suggestions would be gratefully received.

Lilla

Hi there,
Based on your 'rambling' it sounds like you know what to do, but just need a bit of encouragement as it's been a rough ride for you bearing all the financial burden and bringing up your children.

As you mentioned it, paying into an endowment doesn't ensure that you'll get your money back. However, there is a good indication in the annual letters, when the estimated final value is shown along with a green / amber / red sign. If it's anything but green, it may be a good idea to cash it in and reduce the financial burden on both the premium side and the mortgage payment side.

However, before you do that, it may be worth checking how much a life cover policy would cost for you, so you and your children are not left unprotected, if you did cash in the policies. Dependent on the quote your receive (not the initial quote, but the quote after underwriting) and how it compares to your endowment policy premiums, you may find it easier to make a decision.

hellesbelles66

Thanks for the reply Lilla,

Yes I know that selling is really the best option, but being as though I have a long and proven track record of making the worst possible decisions, thought it would be worth checking.

Once sold the market is very likely to make unexpected record gains and I'll have cashed in too soon:rotfl:

holly_hobby

When excactly in 1988 (date and month) did you purchase the policies, as there are 2 glaring issues which may need to be looked at if these were regulated sales.

Holly

hellesbelles66

Hi Holly

Just looked at the policies. My mistake -not 1988, but both sole policies were taken out 27th November 1987 and the joint one was 11th July 1989.

Thanks

holly_hobby

Ok ...

Pre 29 April 1988 - financial services was not a regulated industry.

I asked this, because I wondered why as a married couple, you were sold 2 independent life (presume) low cost endowments (LCE), with what appears to be a joint top up LCE policy in July 1989 (which was a regulated sale). As a pre A day sale though in 1987, no advice was required or given by the salesperson as to their suitablity to your requirements/needs , so there is little merit for me to explore them any further.

With regards to what you do with your policies now ...

Well there is no longer a market for selling endowments - so thats out.

You have dependents, and whilst active the policies will gte to repay the sums assured, upon your death or your ex husbands death (presumed signed over to you) - which of course will not be the full mge as an element of it is split between the 2 individual policies you hold.

If you cancel or surrender the policies, you will lose the life assurance aspect, which of course can be replace by a standalone term assurance.

If you cancel or surrender them you will have no mge repayment vehicles supporting your interest only mortgage - so you would need to consider converting all or as much as possible to capital & interest.

If the policies are with profits, and if you surrender early, you will lose the full benefit of any terminal bonus that may be paid, in addition to the policy value, at maturity. NB - this additional payment is NOT guaranteed, and is payable at the discrection of the provider.

Or you keep the policies running, and convert a sum at least equal to the estimated shortfall (or as much as affordable to capital & interest) - that way any shortfall realised at maturity will be someway offset by the reduced capital borrowings you have made.

Or you convert the whole borrowings to capital and interest and take the guesswork and risk out of whether the mge will be fully repaid at the end of the term.

So in a nutshell it all boils to whether you can afford to covert your mge fully to a repayment method, and thereby be left to freely chose to either maintain the polices or surrender them. (notwithstanding the loss of life assurance on any surrender/cancellation ).

A question only you can answer I'm afraid ...

Hope this helps

Holly

hellesbelles66

Thanks Holly,

Original policies were bought when we were engaged and looking to buy our first home. Salesman was a family friend who we believed when he said this was the way all mortgages were going - he also said many years later that as he thought we weren't going to stay together separate policies would better. The joint one was taken out when we bought a bigger house.

Mortgage amount is £40,000. I have contacted the insurance company today; there is no redemption fee or any final bonus so I am looking at the surrender value being about £15,800. Am going to look into taking out a repayment mortgage.

Thanks for taking the time to reply.

holly_hobby

Ah .... that would justify the sale of 2 separate policies.

At the time endowment mortgages were popular - and at the time endowment policies were performing, and even maturing with excess, no one could have forseen the downturns and catastophic effect on investments and the economy that has been witnessed. They were also cheaper per month than a comparible C&I mortgage, with intergrated life cover, which also added to their attractiveness to the consumer.

Yes - mitigating the impact of a failing endowments would be achieved by changing all (or as much as possible that can be afforded ) to a repayment mortgage.

Your lender will guide you through the process.

Hope this helps

Holly

Froggitt

My ex-husband and I were sold 3 endowment policies in 1988 (one for my life cover, one for his and a joint one) in order to pay off our mortgage in 2023.

Thirty five years?

redmalc

Hellesbelles,only you can make the decision but i will outline my recent position.
In June 1987 we took out an endowment to cover our 16K mortgage and it was for 25 years at £22 per month,we were lucky enough to have cleared the mortgage some time ago so the endowment was a life policy and an investment.
We received the warning letters in 2006,7,8,9 etc but made the decision to finish the policy hoping the final bonus would make up any shortfall,to our amazement we recived a cheque a few weeks ago for £15,880.00 in my eyes it was a result

hellesbelles66

Thanks redmalc - wow that certainly is a result! Hope you're enjoying the surprise. No final bonus for me I'm afraid.

Froggit - yes 35 long long years!