Terminal bonuses: still going down

EdInvestor

According to the latest Money Management endowment survey

Most of the policies sold in the 1980s were designed as long-term investments that were intended to repay home loans. As a result, a big slice of the business went to major insurance companies who had ties to the leading mortgage lenders.
Those insurers included Standard Life (linked to Halifax mortgages), Friends Provident, Legal & General and Norwich Union. All four companies are now producing below average returns..

Editor Janet Walford said: "There is no doubting that the results are disappointing, especially compared with 10 years ago. Total benefits from a 25-year policy with Standard Life, for instance, have fallen by 63 per cent in a decade. Even Royal London, which used to be among the better performers, has seen its total payout slump by nearly 50 per cent since 1997."

payless

from another recent article

http://www.telegraph.co.uk/money/main.jhtml?xml=/money/2007/03/03/cmendow03.xml

Prudential, Norwich Union, Scottish Widows, Legal & General and Liverpool Victoria have all announced that their 25-year £50 a month mortgage endowments maturing this year will exceed the target set at outset

EdInvestor

25-year £50 a month mortgage endowments maturing this year will exceed the target set at outset

How pathetic.These endowments would still have had the benefit of tax relief, but are still only just scrpaing a result that pays off the mortgage.

What happened to the lump sum for the new car or the holiday of a lifetime?

dunstonh

How pathetic.These endowments would still have had the benefit of tax relief, but are still only just scrpaing a result that pays off the mortgage.

Yes. How pathetic that the people with these have benefited in lower monthly payments than a repayment mortgage and come in with a surplus despite some significant stockmarket crashes and frequent changes in taxation and economic cycles.

Worth noting the comment about Pru: Prudential said all its 11,057 maturing endowments this year will meet their repayment targets, with the average surplus expected to be £4,400

Each of the last three years shows the average maturity surplus increasing. £4,400 buys a very good holiday.

JoeK_3

EdInvestor wrote: »

How pathetic.These endowments would still have had the benefit of tax relief, but are still only just scrpaing a result that pays off the mortgage.

What happened to the lump sum for the new car or the holiday of a lifetime?

You can't just tar every Insurance Company with the same persistent brush.

There are many investors who have enjoyed surpluses in the past as well as losses and I'm sure that that will be the case in the future.

It's a good job that there a a mix of people on this forum to give a balanced view.

JoeK

EdInvestor

Anybody paying more than 6% interest on their mortgage should consider whether they would be better to surrender their endowment and use the money (plus the endowment premiums) to reduce the size of their mortgage.

Their return may well be higher that persisting with the endowment, and there is no risk.

With terminal bonuses continuing to go down at most offices even after 4 straight years of market recovery, many people are just throwing good money after bad with these obsolete, expensive and highly taxed policies which reached their expiry date some years ago.

absolutebounder

EdInvestor wrote: »

Anybody paying more than 6% interest on their mortgage should consider whether they would be better to surrender their endowment and use the money (plus the endowment premiums) to reduce the size of their mortgage.

Their return may well be higher that persisting with the endowment, and there is no risk.

With terminal bonuses continuing to go down at most offices even after 4 straight years of market recovery, many people are just throwing good money after bad with these obsolete, expensive and highly taxed policies which reached their expiry date some years ago.

So I get the idea you dont like endowments perhaps you could say what we should have bought instead including the companies you like ie for the sake of argument jupiter income would you have recommended that 10 yrs ago?