Endowment advice

Derek_Duval

I've been mortgage free for the last 6 years, but still have the endowment which has been running for 15 years, with still 10 years left. The surrender value is 11K and monthly payments are £60. Now I want to free up some cash for some home improvements, and I'm not sure whether to cash it in or even sell to a broker if still possible (it's a with profits policy). I would still want to save the £60 a month for the next 10 years. So my questions are,

Should I sit tight and wait 10 years. Doing this though might mean that I can't keep 100% debt free as I am now. My savings will cover my next car purchase, with not much left over.
Or should I cash it in or sell to a broker? If so what would be the best way to invest £60 a month for 10 years?
My intention was always to let the endowment run until the 25 years were complete, but with the current economic climate I don't have as much spare cash as I used to have.
Also as I had paid of my mortgage, and the endowment seller had gone into liquidation (Berry Birch & Noble), I never pursued shortfall compensation. I did contact a few claims companies at the time who gave me the same conclusion, I hope this was correct as the first high risk warning was over 3 years ago.

TIA

McKneff

First of all, no one wants to buy endowments any longer so that take that out of the equasion.

It wasnt a case of 'compensation' it was to get you back into the same financial situation had you had a repayment mortgage, so that's irrelevant too.

Dont forget, while you have this endowment going you have life assurance so it;s worth remembering that.

So now it may be easier to decide now. 2 choices, leave it or cash it in.

Derek_Duval

Thanks for the advice. Regarding the live assurance, my company has just stopped the death in service benefit, so I'm in the process of taking out separate life cover, and an extra 40K is quite cheap at my age. There does still seem to be quite a few companies around buying endowments, so I've requested a few quotes, should be interesting what they offer, not expecting much, even though one claims to offer up to 40% more than surrender value lol

dunstonh

The market for buying endowments is tiny compared to what it once was and they are selective and not offering much above surrender. Plans with mortgage endowment promises tend to be popular. Although that is quite cheeky on their part as MEPs can be highly valuable and many people dont realise they have one.

McKneff

So deduct the amount you wil pay for the new life cover from the £60 how much is the difference.
If you kept your policy you wouldnt need to buy this.

Be very careful of selling it. The world is full of sharks,

40% more, I wouldnt believe it for a second to be honest.

And remember there is likely to be a terminal bonus on your policy.

kingstreet

Does the insurer offer loans on the policy value?

This may be a route to raising the capital you need without the surrender/sale route.

Derek_Duval

McKneff wrote: »

And remember there is likely to be a terminal bonus on your policy.

The latest statement does say "A final bonus MAY apply on maturity" and the previous warning letters have mentioned I may get a top up.
The Red alert letter from Aviva mentions that due to there re-attribution process, any actual shortfall may reduce up to £6000 (maximum promise amount). I can't find any clear answers to this & have no idea how much, if any would I be entitled to? Would having already paid my mortgage effect this?

dunstonh

ahh, its Aviva. Then there could well be an MEP value to consider then.

Derek_Duval

dunstonh wrote: »

ahh, its Aviva. Then there could well be an MEP value to consider then.

Is there anyway of knowing roughly what this value is likely to be? And is it still relevant if the mortgage is already paid? My latest statement says
" Following the re-attribution process which completed in 2009, we've been able to removed one of the fund related conditions applying to the mortgage endowment promise. This is good news and means any actual shortfall will reduce by up to £6,000 (maximum promise amount), assuming you continue to meet all the conditions set out in Answers to some questions you may have"
So it will reduce by "up to", which could be any value below 6k?

Thanks

elantan

dunstonh wrote: »

ahh, its Aviva. Then there could well be an MEP value to consider then.

i have been told i have an MEP but my endowment is no longer connected to my mortgage as it was never going to cover it, will i still be entitled to the MEP even though my endowment is no longer connected to my mortgage?

dunstonh

Is there anyway of knowing roughly what this value is likely to be?

You know the maximum but that is all. Although you can make a fair guess.

nd is it still relevant if the mortgage is already paid?

yes it is

So it will reduce by "up to", which could be any value below 6k?

Yes.