L&G Endowment surrender/compensation

Craigybabes

Hi, I have had an offer of £2,500 for mis-sold endowment which is great. However, they have also offered me the chance to surrender my policy and pay me £11,869.07. It's been running since 1999 and matures in 2024, paying in £74.44/mth. I've worked it out and it's slightly less than the premiums that I've paid in.
I'm not going to ask whether I should surrender it or not, just as to why it's less than what I've put in over the last 12-13 yrs.

I've made arrangements for my mortgage to be repaid now, so this will either serve to pay some off my mortgage by surrendering it OR as a savings plan and keep it going.

Thanks in advance.

kingstreet

Your premiums are paying for life cover, maybe critical illness cover, the insurer's expenses and paid the introducing agent's commission, so it's likely the value will be less than the premiums paid. In addition, the investment performance would also influence the value.

Craigybabes

Yes, it does have critical illness attached to it. Not sure I want to leave it in there for another 12yrs now.....it may be best to stick it somewhere else or pay it off the mortgage.
They do say projections at 4% should mature at £29,100, however they say 6% is a reasonable assumption and should mature at £35,300. So that suggests it will improve in the next half or at least start to be positive.

dunstonh

just as to why it's less than what I've put in over the last 12-13 yrs.

You may have heard of something called the credit crunch and global recession. That has seen a poor period in investment returns.

So that suggests it will improve in the next half or at least start to be positive.

It does not suggest that. It is an example illustration using defined rates. The mid rate should be a reasonable expectation based on long term average but it could easily end up being the lower or higher or something completely differently.

Craigybabes

Yes, you're right, I realise that's not what was being suggested
I'm hopeful that it will end up being more than I pay in

Time to have a think what to do then...

Thank you v much

McKneff

The life cover you have had over all those years has to be paid for by you.

Just thank your lucky stars that your family have never had to claim on it.

_gav_

I would carefully read the terms of the critical illness cover. I bet if you tried to get the equivalent cover now it would cost you a fortune!

I have a L&G endownment and was looking to do the very same, cash it in. When I tried to get equivalent critical illness cover elsewhere I was quoted huge figures. My policy was from late 90's as well.

Craigybabes

Oooh, yes. I didn't consider that. I'll look into it, cheers.

kingstreet

It's not only a cost issue on historic CI.

The definitions may include such illnesses as angioplasty, not available as a full definition today. In addition, other definitions have hardened over the years.

For example, I was doing a comparison between L&G's 2001 defintions and Friends Life's 2013 defs yesterday. The L&G cancer def is;-

L&G – A malignant tumour characterised by the uncontrolled growth and spread of malignant cells and invasion of tissue. The term cancer includes leukaemia and Hodgkin’s disease but the following are excluded;-

- all tumours which are histologically described as pre-malignant, as non-invasive or as cancer in situ
- all forms of lymphoma in the presence of HIV
- Kaposi’s sarcoma in the presence of HIV
- any skin cancer other than malignant melanoma.

A new plan now would see a prostate cancer claim rejected if the cancer had not reached a Gleason Score of 6, where the L&G definition would more than likely see a payout for a lower grade cancer of the prostate.

New plans may cover more illnesses than older ones, but look to supplement these with your old cover, don't simply replace the old ones.

Get rid of such cover at your peril!

_gav_

Exactly as kingstreet says, what I meant say as well :-)

Craigybabes

I had a quick look at life cover with Criticak illness and it was approx. £25/mth and yes, my current cover seems more comprehensive. I will keep it on going and take the £2500 offer of compensation and keep paying in the £75/mth. I'll just keep an eye in year by year as I assume I can cash it in at any point can't I?
Thanks