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surrendering endowment
andybodoyd
Posts: 49 Forumite
Hi, Most likely going to sell a underperforming endowment back to Zurich (Allied Dumbar) and swap morgage to repayment. The surrender value changes daily. Can you tell which day it is best to surrender? Does it make alot of difference or will it just be a couple of pounds difference. Do you get paid the amount when you phone to surrender or is it when the paper work is completed. Thanks for any help.
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andybodoyd wrote: »Hi, Most likely going to sell a underperforming endowment back to Zurich (Allied Dumbar) and swap morgage to repayment.
The surrender value changes daily.
That's because your endowment policy is directly linked to the stock market.andybodoyd wrote: »Can you tell which day it is best to surrender?
It's not possible to forecast when the stock market will be up or down.andybodoyd wrote: »Does it make alot of difference or will it just be a couple of pounds difference.
Again it will be subject to how the stock market is doing but genarally it should only be a matter of pounds.andybodoyd wrote: »Do you get paid the amount when you phone to surrender or is it when the paper work is completed. Thanks for any help.
It will be calculated on the day that your paperwork hit's their offices.
JoeKI am an Independent Financial Adviser.Anything posted on this forum is for discussion purposes only. It should not be considered financial advice. Different people have different needs and what is right for one person may be different for another. If you feel an area discussed may be relevant to you, then please seek advice from an Independent Financial Adviser who can advise you after finding out more about your situation.0 -
Hi, Most likely going to sell a underperforming endowment back to Zurich (Allied Dumbar) and swap morgage to repayment.
How do you know it's underperforming. AD only offer unit linked plans and most of those have been swinging back in performance with the stockmarket recovery.the surrender value changes daily. Can you tell which day it is best to surrender?
Crystal ball job.Does it make alot of difference or will it just be a couple of pounds difference.
Well, with it having unit linked funds available, you could have seen around 15-20% growth available in the last 12 months. So, if you had done in at the start of the year you would have got around 15-20% less than at the end. Daily fluctuations will usually be less than +/- 1% of the value.Do you get paid the amount when you phone to surrender or is it when the paper work is completed.
They will not act on a phone instruction. They will need it in writing. It takes about 3 weeks to arrive in your bank unless the policy is assigned to your lender.
Whilst I am no fan of AD plans and have seen some poor examples, I have also seen some good examples and you should look at the plan in more detail to see how it is doing and what future potential it has. A lot of very good endowments have been surrendered/sold because the policyholder didnt research what they had first.I am an Independent Financial Adviser (IFA). The comments I make are just my opinion and are for discussion purposes only. They are not financial advice and you should not treat them as such. If you feel an area discussed may be relevant to you, then please seek advice from an Independent Financial Adviser local to you.0 -
Hi. Thanks for the replies, will find out some more details and get back to you. Cheers0
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How do you know it's underperforming. AD only offer unit linked plans and most of those have been swinging back in performance with the stockmarket recovery.
Whilst I am no fan of AD plans and have seen some poor examples, I have also seen some good examples and you should look at the plan in more detail to see how it is doing and what future potential it has. A lot of very good endowments have been surrendered/sold because the policyholder didnt research what they had first.
Hi dunstonh.
How does one go about doing the research on their policies?
As most of you are aware, mine is showing a £32k shortfall. How do I find out about where the money is invested and about terminal bonuses etc. I must admit the telephonist at Zurich was a bit vague.
I have been offered £800 over the surrender value by a firm which makes me wonder if they can see something that I can't.
Cheers
Crazy SaverIf only I knew then what I know now0 -
Getting an IFA to review them is a good way. I did one earlier on a NU endowment with a fellow IFA (who isnt quite as experienced) and this particular example was very poor. I have seen some very good NU example which is why you can never judge them all the same.
Zurich isnt that attractive and £800 over surrender isnt that much. Look at the current position (basic sum assured plus bonuses but not terminal bonus) and see how that compares with your offer. Remember that is the guarnateed minimum maturity value. Maybe there is a big surrender penalty that they gain on even if the returns are limited.
A poor quality policy with a big surrender penalty may get a better offer than a good quality policy with a low surrender penalty. Especially if the surrender penalty ceases before maturity.I am an Independent Financial Adviser (IFA). The comments I make are just my opinion and are for discussion purposes only. They are not financial advice and you should not treat them as such. If you feel an area discussed may be relevant to you, then please seek advice from an Independent Financial Adviser local to you.0 -
Hi,
Start date 1/4/1997----Maturity 2022
Aiming to pay off £64,789 On Amber alert for risk of shortfall
Projected shortfall 4%---24,889
6.25%---11,089
8%--- 2,711 surplus!!!
Paying £118.30 a month
Surrender value at present £12,600.
We may not have to cash it in to change to repayment morgage, but could do things with the money if its not performing, although looking at the original documentation after 10 years it says we may expect to get back £10,300 if we cashed it in and they are offering more than £2000 more so is it performing ok!!0 -
Doing be surprised at the surplus possibility. We are beginning to see more endowments get back into that position. 8% is well within the potential of most unit linked balanced managed funds.
That said, there are often better ways of investing into unit linked funds nowadays and if there is limited or no surrender penalty, then arranging a life policy and using stocks and shares ISAs (which are usually cheaper and more tax efficient) can be the better way to go. However, costing the options up to compare would need to take place.although looking at the original documentation after 10 years it says we may expect to get back £10,300 if we cashed it in and they are offering more than £2000 more so is it performing ok!!
That tells you more than the projection as that illustration uses surrender values right up until maturity. So, if it is £2000 more than it should be at that point, then you are in a surplus position. This highlights the flaws in the projection system.I am an Independent Financial Adviser (IFA). The comments I make are just my opinion and are for discussion purposes only. They are not financial advice and you should not treat them as such. If you feel an area discussed may be relevant to you, then please seek advice from an Independent Financial Adviser local to you.0
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