Final bonus rate conundrum

derbyshire1964

Hello there,

I've just received my final annual statement for a Friends Provident (now Friends Life) endowment mortgage I took out 24 years ago. You'd think by now I'd be able to understand them. Alas, no.
Only this time it's even more confusing because they've included a final bonus rate.
The figure given is 95%, but 95% of what, exactly?
It seems a promising number, but if it's 95% of my 'new bonuses' for this year - £12.65 - I'll get just over £12!
The policy itself was taken out with the aim of paying off a £26,000 mortgage - and promises it would easily do so, with enough left over to buy a small Caribbean island and a Merc.
According to the statement in front of me, the guaranteed amount for bonuses is £8,950; the bonuses added in previous years just over £5,000 and the total guaranteed amount plus all bonuses a fraction over £14,000.
If it's 95% of any one of them I'd be delighted, especially given what I'd been led to expect by previous warning letters from Friends Provident.
Could any kind soul out there with more financial nous than me - and that must be most of you - offer a little elucidation?
Perhaps others out there have recently heard from Friends Life and have a similar final bonus rate figure?
Thanks for reading this far,

Derbyshire1964

kingstreet

Terminal bonus is expressed as either;-

- a percentage of the annual bonuses already attaching
or
- a percentage of the original guaranteed basis sum assured.

Some life offices do it one way, some the other.

Presumably, if the total now guaranteed is £14k and the annual bonuses £5k, that would make the GBS £9k and 95% of that around £9k as well.

derbyshire1964

Thanks for that. Far better than I'd hoped.

Legionrider

I believe the 95% refers to the total of Bonuses added to your policy in previous years plus this years miserly new bonus. so you get 95% of just over £5,000 i.e. £4,750 plus the total guaranteed amount of £14,000 so it should pay out around £18,750. Hope this helps.