sell endownment?

morley_2

We have an endowment policy ex royal ins (25 years-1986), now with phoenix, it is a with profits, with only 4+ years left on it. original mortgage £32000 with a £4000 top up in 1989.
3+ years ago changed mortgage to £25k repayment and £10k variable.
should we sell the endowment?
what should we do re life cover if we do sell?
as of 16/3/07 net surrender value £18824

thanks michelle

morley_2

38 views but no replies, can any body advise

Gorgeous_George

Some will say keep it for the terminal bonus - I'm in this camp.

Others will say sell and invest elsewhere. Yes, it's always good to give advisers more fees.

They'll all ask for more information (see other similar threads for detils required).



GG

kickoff3pm

I too have a Sun A with profits policy now with Phonix, if fact I have two. I've been doing a lot of reseach on selling and the benifits. I'm not sure the advice given here and in the press is correct and some might be jumping to soon perhaps.

Phoenix have performed well this year but like other companies don't give as much bonus as they could in the early years. This money stays within the fund and at the end is distributed to the final year bonus. I read recently that a fund maturing earned 3 times it's projected amount with them.

The projected shortfall on my morgage is £10k in 7 years that's about 20%. Not a lot with the house value has risen 150% in 2 years. When weighed against a possible gain of 300% for the policy I'm thinking it's maybe best to ride this out. But at the same time put £1,000 a year in an high interest account to cover the possible £10k loss.

Another point is people should find out how a fund is invested, if a large amount is in the equites then that fund is suspectable to the stock market moves. But the SUN A fund has the fewest eqities at around 40%. The rest is bonds, property and cash, these are more stable.

I'm not convinced yet to hold or sell, but I've yet to find anyone to convince me selling will be better by more then a few £1k and in 7 years time that equates to very little unless you are really up against the wall.

dunstonh

Phoenix have performed well this year but like other companies don't give as much bonus as they could in the early years. This money stays within the fund and at the end is distributed to the final year bonus. I read recently that a fund maturing earned 3 times it's projected amount with them.

Phoenix have a number of closed life company funds. You cannot compare all Phoenix policies with each other as it depends on which legacy life company the policy is with.

It also depends on the target growth rate set up on the policy. Example.

policy 1 has a target growth rate of 4%. Policy 2 has a target growth rate of 8%. Average return over 25 years is 7%. Therefore Policy 1 pays a surplus but policy 2 has a shortfall. However, they are both invested in the same fund.

I have a client that has a Std Life endowment that is on track for a £20,000 surplus (and he isnt alone). However, there are many more that are going to fall short.

There is no hard and fast rule with these. You need to look at the data applicable to your policy and compare that.

There have been some very good endowments surrendered or sold because the policyholder didnt realise they had a good one because everyone was saying endowments were bad. Equally, there are some very poor endowments being held onto by people in the hope they improve.

There is a bit of joke going round financial services at the moment that suggests that as endowments return to surplus, the claims companies will start advertising that you can claim a mis-sale if you werent sold an endowment.

Rabiddog_2

I read recently that a fund maturing earned 3 times it's projected amount with them.

This is urban myth and legend. NO fund is going pay this amount, no fund is even likely to pay at very very best 150% of its projected amount. I am in phoenix too, with two unit linked funds tho.

turbobob

dunstonh wrote: »

There is a bit of joke going round financial services at the moment that suggests that as endowments return to surplus, the claims companies will start advertising that you can claim a mis-sale if you werent sold an endowment.

Or possibly "I was wrongly advised to surrender my endowment when I complained I was mis-sold it." I can see it happening....

And just for the record I have seen an endowment recently which matured for 3 times its target amount. Granted, it was sold in 1980, I believe or maybe a little earlier, so can't be compared to one taken out in the late 80's or 90's.

yorkshire_puddin

I'm no expert but this is what I did..
I cashed in my endowment, (£34,000 target was going to shortfall by £8,000-£13,000) complained about mis-selling, won and put all the money gained into an offset mortgage at Woolwich. With the money gained and my savings, within 6 months I've saved £1000 in interest payments.

morley_2

thanks for the advice, but still confused on what to do