Endowment questions

dirk_

Afternoon All

I received my latest statement from Aviva yesterday and wonder if someone can offer advice on if it is worth keeping this policy running.

It is no longer linked to any mortgage

Annually we pay in £740.16

We did think of surrendering this policy and paying a lump sump in to our mortgage (bringing it down to round 30k)

Any suggestions ?:D

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kingstreet

Is there a maturity guarantee?

Take any guarantee into account when considering termination.

dirk_

Is this something Aviva can tell me??

Thanks for the reply

kingstreet

Yes. Old CU, NU and GA policies which were absorbed into Aviva can be subject to a mortgage endowment promise;-

http://www.aviva.com/media/news/item/uk-strong-growth-for-aviva-with-profits-customers-9619/

Aviva launched its mortgage endowment promise in 2000 to assist policyholders who, at the time of the announcement, faced a projected shortfall on their mortgage endowment policy (the amount needed to pay off their mortgage when it matured). The mortgage promise was conditional on the company earning a sufficient investment return on its free reserves as well as the policy not being altered or sold. Aviva committed around £1 billion of capital for future endowment shortfall assistance – underlining the strength of its with-profits funds.

dirk_

Thanks for the advice, I will contact Aviva and find out

dirk_

the maturity guarantee is £14538.00

Current surrender value is £ 13276.20

kingstreet

So, you have something to think about...

dunstonh

dirk_ wrote: »

the maturity guarantee is £14538.00

Current surrender value is £ 13276.20

Aviva normally quote the MEP as a figure that is added maturity. So, if the MEP is £14,538 and you got a return that say matched the middle projection figure then they would add the MEP value to that (capped to target figure if it goes above it).

dirk_

Thanks for the info guys

But can you explain that so a 5 year old can understand it:question:

dirk_

dirk_ wrote: »

Thanks for the info guys

But can you explain that so a 5 year old can understand it:question:

Anyone help

ValHaller

dirk_ wrote: »

the maturity guarantee is £14538.00

Current surrender value is £ 13276.20

I am not a financial advisor, so don't blame me if this is wrong.

As I see it, you are paying £740/year to have £14538 at the earlier of 2024 or your death. But you do also have the prospect of growth on that money beyond the £14538.

At the moment you are able to cheat death by taking £13276 now and not paying premiums for another 2 years to give you roughly your £14538. That money will earn the return of reducing your mortgage interest which is more certain than the returns on the policy. Given the surrender value is so high, there is little added value in the life insurance component.

I think I would take the surrender. Having said that, if for any reason the returns over the next few years are likely to outrun the premiums, I might hold on