pay endowment premiums or mortgage

straitjacket

I could do with a little advice please. I have been paying in two endowments with (formerly national mutual of Australasia) Friends Provident totaling £80.00 per month, ince the early 80's. Obviousley at that time the bonuses were high. Now I have just had a statement from FP stating that that with the total gauranteed payout (due in 8 years time) totaling £56000 I got a yearly bonus of just £139.69 which is just 0.25%.
What I need to know is: would it be better to make these policies paid up and pay the £80 each month off the mortgage,keep the status quo or put the money in an ISA?

bdl_3

In a similar vain - I have 2 endowments (yes I know - what a plonker) and was wondering about these companies that are "supposed" to give you a better deal if you cash them in before they end.

Has anyone done this, has anyone got any recomendations?

Or Martin are you going to be delving into this??????

dunstonh

Who knows?

Also, you cannot calculate the annual bonus based on the current value. These plans would almost certainly include a guaranteed sum assured. That is given to you from day one and the annual expectation on bonuses should be lower than that achievable on savings accounts. Historically, that hasnt been the case but should have been and is now coming in line with where they should have been. So, any annual equivalent rate should include the guaranteed sum assured.

Over the last 10 years with profits plans have performed very nicely when compared to the average unit linked investment. A couple of years in isolation shouldn't be used to decide what you do in the future. Bonuses have been on decline but most providers bottomed out this year with the expectation that it will begin upward again over the coming years. Give me a crystal ball and I will tell you by how much and when

As these plans were early 80s, they are benefiting from Life assurance premium relief (life policies commenced before 14/3/1984). Plus these plans are qualifying. So, if you are a higher rate tax payer, you will have no additional tax to pay.

EdInvestor

straitjacket wrote:

I could do with a little advice please. I have been paying in two endowments with (formerly national mutual of Australasia) Friends Provident totaling £80.00 per month, ince the early 80's. Obviousley at that time the bonuses were high. Now I have just had a statement from FP stating that that with the total gauranteed payout (due in 8 years time) totaling £56000 I got a yearly bonus of just £139.69 which is just 0.25%.
What I need to know is: would it be better to make these policies paid up and pay the £80 each month off the mortgage,keep the status quo or put the money in an ISA?

If you can give us:

1)The current surrender value
2)The total of contributions you still have to pay to maturity
3)The total of the guaranteed sum assured and the accumulated guaranteed attaching bonuses

Then it ought to be possible to work out if it's worth keeping it.

Is there any terminal bonus left in the policy value or has it all gone?

straitjacket

The surrender value is about £27000. This is a quote from this time last year.
Assumong I pay up to maturity then I will pay another 7800 pounds.
The gauranteed amount plus bonuses to date add up to £56018.
I am not at the moment looking to surrender but to make it a paid up policy and divert my premiums to a better fund.

I know that terminal bonuses can make up a large chunk at the maturity date but over the last years they seem to be getting smaller! (as do the bonuses)
I also have to stress that starting with a gauranteed sum of £7000 and £20000 I am not complaining but am always happy to have it work a little harder.