Happy with endowment maturity value after 25 years

Amanda65

Froggitt wrote: »

http://www.thisismoney.co.uk/money/pensions/article-2138023/How-dead-insurance-funds-holding-life-savings-months-end.html

A so called Zombie fund, usually characterised by moving into bonds and cash, leading to low but low risk returns.

Am I in a parallel universe?

Sorry - really confused about how this relates to my endowment policy ???

Froggitt

http://www.thisismoney.co.uk/money/pensions/article-1708821/Zombie-funds-that-cut-your-pension-income.html

These closed funds don't have to compete for new business by offering good rates

http://www.thisismoney.co.uk/money/news/article-1695591/Zombie-with-profits-funds-devour-190bn.html

Investors led to believe that years of thrift would earn them a comfortable retirement — or pay off their mortgage — have been rocked by dismal investment performance, sky high charges and appalling customer service.

This scandal has left:
• Homeowners who took endowments unable to repay their mortgages;

Sorry Amanda - I cant comprehend how Windsor Life and similar funds are leaving investors tens of thousands under water, and your policy is clearly well in the top 1% of maturing policies.

Flugelhorn

I had a similar low start with Friends Provident in 1986 for £34,500 - moved a couple of times and eventually got an offset mortgage in the late 90's. endowment looked really bad then so cashed it in (and a couple of others) and saved that and the spare cash against the offset - seemed to me to get the total mortgage down more quickly.
Always really tricky to know what to do with these things - the OP has done well but sounds like others didn't.

Amanda65

Froggitt wrote: »

http://www.thisismoney.co.uk/money/pensions/article-1708821/Zombie-funds-that-cut-your-pension-income.html



http://www.thisismoney.co.uk/money/news/article-1695591/Zombie-with-profits-funds-devour-190bn.html

Sorry Amanda - I cant comprehend how Windsor Life and similar funds are leaving investors tens of thousands under water, and your policy is clearly well in the top 1% of maturing policies.

The policy is now with Re-assure not Windosr Life and whilst I feel dreadfully sorry for anyone caught up in yet more dodgy practice am unsure what you want me to say or do?

silvercar

silvercar wrote: »

We had one of those low starts with increasing premiums with Legal and general. It matured in May 2011 and paid 98.5% of the mortgage. So not as terrible as it could have been (or as bad as the one due to mature next year that is "unitised" and currently forecast to pay out only 60% of the mortgage).

dunstonh wrote: »

Low start endowments were typically poor value. You paid in more over the term and got less back than a level premium one. Interesting yours came that close. Had it been level then it would almost certainly have hit target.

So the next one is now due to mature. This is from Standard Life, who were supposedly the best performers when we took it out in 1988. Not low start, an ordinary with profits endowment. We chose them because people were saying that L&G weren't as good. Matures in May, forecast to give us 55% of the (then) mortgage. Pah! Should have added to the low start L&G.

Froggitt

Amanda65 wrote: »

The policy is now with Re-assure not Windosr Life and whilst I feel dreadfully sorry for anyone caught up in yet more dodgy practice am unsure what you want me to say or do?

No nothing for you to do or say. Not even sure theres any dodgy practice going on.......just poor investment returns.

jamesmorgan

Backbiter wrote: »

How does that growth compare with other maturity values with other companies?

My 25 year policy with GRE (now part of AEGON) matured last year with a payout of £45K. It was designed to cover a mortgage of £30K. The key to analysing performance is not to look at whether they are low start etc, but to work out what performance returns on the monthly premium (after deduction for life insurance premium) is required to achieved the desired payout. Different insurance companies used widely different assumptions when setting premium levels.

My GRE policy only required 4.4% annual growth to hit target (it actually achieved 7.3% growth). I also have a Standard Life policy yet to mature, but this assumed 7.1% growth. This is likely to have a short-fall, but this is more to do with an overly-ambitious performance assumption than poor investment performance.

Froggitt

jamesmorgan wrote: »

My GRE policy only required 4.4% annual growth to hit target (it actually achieved 7.3% growth). I also have a Standard Life policy yet to mature, but this assumed 7.1% growth

!!!!!!? Parallel universe again methinks.

This http://monevator.com/ten-year-bear-market/ is a bit out of date but

The UK FTSE 100 delivered only 10% over 15 years

Thats less than 1% p.a. over 15 years, and not many lifecos have given more than a couple of percent in bonuses over the past few years. How can annual returns of 7.3% come in?

jamesmorgan

Froggitt wrote: »

!!!!!!? Parallel universe again methinks.

This http://monevator.com/ten-year-bear-market/ is a bit out of date but

Thats less than 1% p.a. over 15 years, and not many lifecos have given more than a couple of percent in bonuses over the past few years. How can annual returns of 7.3% come in?

You need to compare the same investment periods. For the 25 years from 1987 to 2012, the FTSE all-share index has risen from 870 to 3093. This is equivalent to a compound annual growth of 5.2%. However, about half of investment growth comes from dividends. This would suggest a total return from the FTSE all-share index of around 10% over that time period. Charges in endowment products were high (prob around 2%/annum) so I would expect an endowment product to deliver returns of up to around 8% 1987-2012. Typical returns may be a little lower than this as some of the money will be invested in fixed-interest rather than shares.

Also, most of the returns from an endowment come from the terminal bonus not the annual bonus. For my GRE endowment, the terminal bonus was 139%.

Froggitt

jamesmorgan wrote: »

I would expect an endowment product to deliver returns of up to around 8% 1987-2012. Typical returns may be a little lower than this as some of the money will be invested in fixed-interest rather than shares.

But they havent have they? Forget the Zombies....what have the likes of Aviva, Prudential and Standard Death returned 87-12, which coincidentally was the same as my endowment matured this year, which was £41pm, matured at around £30k.