Endowment Problem

trevorjdaniel

Hi There,

I was looking for some help/advice on an issue I have with an old endowment policy I had running.

When I bought my house back in 9/96, I took out an endowment mortgage. I paid this endowment for a few years and then fell on hard times and stopped paying the endowment.

I then approached the endowment company for a settlement value because I needed to cash it in..

The endowment company initially valued it at around £8250. Then, when I asked to cash it in they replied that because I had stopped paying, they had continued giving me life cover and this life cover had "eaten up" the complete £8250 !!

They say they owe me nothing.

Does this sound right?

It sounds terribly unfair.

Any advice? I am determined to get some of this money back. It doesnt seem fair that I have paid all this money in life cover without them even telling me.

Thanks in advance

Trev

dunstonh

When you make a policy paid up you either cancel the life cover or get the life cover premiums deducted from the investment element.

Any advice? I am determined to get some of this money back. It doesnt seem fair that I have paid all this money in life cover without them even telling me.

And when you stopped payments, did you tell them to cancel the life cover but leave the money invested or did you do nothing?

What does it say in the policy document about direct debits stopping?

EdInvestor

Life cover was more expensive in those days but it would certainly be worth trying to do the maths.

maninthestreet

When did you stop paying into this endowment, and what was sum assured and the monthly premium? Even at £50/month for the life assurance, it would take 13 years and 9 months to use up all the £8250.

trevorjdaniel

Thanks for the reply.. answers and more questions to follow... lol

dunstonh wrote: »

When you make a policy paid up you either cancel the life cover or get the life cover premiums deducted from the investment element.

And when you stopped payments, did you tell them to cancel the life cover but leave the money invested or did you do nothing?

What does it say in the policy document about direct debits stopping?

I'm a little confused about the terminology in para 1 but off the top of my head, yes, you are right... i did nothing.....i just stopped paying..

also, to add injury, im not sure i can lay my hands on any documentation except the red letter they sent me yesterday saying my endowment is in danger of under achieving.

how can they send me one letter saying its going to under achieve and then when i phone up, they bluff me off saying its worth nothing..

dont make sense...

i know i broke "their" rules, yes, i admit, i stopped paying, yes, i admit, i may have not answered their letters... but i also admit to have paid them at least 36 x £111.xx

So, what you reckon guys? Should they have automatically used my money to pay the life cover and should it have cost £8250??

Trev

"power to the people"

trevorjdaniel

maninthestreet wrote: »

When did you stop paying into this endowment, and what was sum assured and the monthly premium? Even at £50/month for the life assurance, it would take 13 years and 9 months to use up all the £8250.

im going to try and look into this.. again, must admit, i have been caught with my panties down... i dont have the paper work to prove when i stopped paying. im guessing it would have been around late 1999

Trev

dunstonh

i know i broke "their" rules, yes, i admit, i stopped paying, yes, i admit, i may have not answered their letters... but i also admit to have paid them at least 36 x £111.xx

So, you only made 36 payments before stopping it? The first 18-24 months would have gone on charges (products were much more expensive back) That leaves you with around 12-18 payments but some of that £111 went towards like cover and possibly CI and waiver. So, lets say £80 was going to the investment and you have 18 months. That leaves a value of £1440.

If you didnt notify them to make the plan paid up then the life cover, if redirected to the value would soon erode that £1440.

how can they send me one letter saying its going to under achieve and then when i phone up, they bluff me off saying its worth nothing..

The plan had an original target value. That target value would have still been there despite you not paying into it.

So, what you reckon guys? Should they have automatically used my money to pay the life cover and should it have cost £8250??

36 payments is never going to give you that amount. Indeed, it would be closer to 8-10 years payments to get to that sort of amount.

JoeK_3

In my opinion, there are lot's of things here that don’t ring right.

1) A surrender value of £8,200 after three years. Have you got this in writing?

2) The date that you made this paid up. Have you got this date?

3) Who is the Insurance Company? This sounds like a unit linked policy that went through the stock market crash of 1999 and caused fund values to reduce by up to 50%.

I would recommend that you write to the Insurance Company and ask them for a full audit to be conducted on your policy and ask for this in writing.

Only after having all this information available, can you decide if you have been dealt with fairly.

JoeK

trevorjdaniel

JoeK wrote: »

In my opinion, there are lot's of things here that don’t ring right.

1) A surrender value of £8,200 after three years. Have you got this in writing?

2) The date that you made this paid up. Have you got this date?

3) Who is the Insurance Company? This sounds like a unit linked policy that went through the stock market crash of 1999 and caused fund values to reduce by up to 50%.

I would recommend that you write to the Insurance Company and ask them for a full audit to be conducted on your policy and ask for this in writing.

Only after having all this information available, can you decide if you have been dealt with fairly.

JoeK

Hi JoeK,

Answers...

1. No, I have nothing in writing except the red letter they sent me yesterday.

2. No, I dont have this date.

3. The company in questions is Phoenix

Thanks for the information on what I should ask them for... I'll get a letter in the post tomorrow morning.

Is it just a case of asking for a "full audit"? Do they have to give me this information? How would you word it, any suggestions?

Thanks

Trev

JoeK_3

Tell them that you would like a full explanation of how the charging structure was applied, since you made the policy paid up.

E.g.

1) What was the value of the policy before the policy was made paid up

2) What was the surrender value of the policy, before the policy was made paid up.

3) How was the value erroded each year after the policy was made paid up.

4) When was the policy paid up value spent.

JoeK

dunstonh

I am wondering now if it was a conventional with profits endowment with a basic sum assured. That would pay bonuses on top and give an artificially higher value. The only way to get that guaranteed sum assured is go through to maturity. So, when the payments stopped, the premium was diverted to the bonuses. Once the bonuses ran out, there was no money left and the guaranteed sum assured was lost.

As Joek says, you need to have the information on the plan. Otherwise we are all just guessing.